Pound (GBP) slides as BoE hawks abandon rate hikes
The pound (GBP) slumped yesterday after markets read the Bank of England’s (BoE) latest interest rate decision as dovish.
Two of the most hawkish policymakers at the bank who had voted for a rate hike at the last meeting stop pushing for tighter policy. Investors interpreted this as a significant shift towards coming rate cuts, which dragged Sterling lower.
Sterling remains under pressure this morning in the wake of additional comments from BoE Governor Andrew Bailey. Bailey suggested that rate cuts are now ‘in play’ at future meetings of the bank.
Euro (EUR) unclear amid mixed factors
The euro (EUR) struggled to find a clear direction on Thursday as multiple factors pulled the common currency in different directions.
While a stronger-than-forecast services PMI supported EUR, European Central Bank (ECB) rate cut bets and a recovery in the US dollar (USD) both stifled the euro.
This morning, Germany’s latest business climate indicator could impact EUR. Could a modest improvement be enough to push the single currency higher?
US dollar (USD) recoups post-Fed losses
Yesterday, the US dollar managed to recoup some of the heavy losses it suffered in the wake of the Federal Reserve’s interest rate decision on Wednesday evening, having seemingly entered oversold conditions.
In addition, lower-than-forecast US jobless claims lent the ‘greenback’ modest support.
Looking forward, two Fed policymakers are due to speak later today. If they strike a relatively dovish tone, the US dollar could end the week on the defensive.
Canadian dollar (CAD) buoyed by USD recovery
The Canadian dollar (CAD) traded true to its positive correlation with the US dollar yesterday, with the crude-linked currency trending higher despite weaker oil prices.
The focus today turns to Canada’s latest retail sales figures. Could a drop in domestic sales in January weigh on the ‘loonie’?
Australian dollar (AUD) slumps in risk-off trade
The Australian dollar (AUD) tumbled in overnight trade, as a cautious market mood following some of this week’s central bank surprises, saw investors shun the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) pressured amid downbeat mood
The New Zealand dollar (NZD) also weakened overnight as the ‘Kiwi’ also fell afoul of the deteriorating market mood.