Pound (GBP) slips amid signs of easing inflation
The pound (GBP) fell yesterday as easing grocery inflation fuelled bets on a summer interest rate cut from the Bank of England (BoE).
Grocery inflation fell from 2.4% in May to 2.1% in June – its 16th consecutive decline. With price pressures seeming to ease, markets bet that the BoE would start its cutting cycle in August.
This morning, Sterling is ticking higher despite the UK’s consumer price index showing that inflation fell to the BoE’s 2% target last month. Signs of sticky service inflation seem to be lifting GBP by dampening BoE rate cut bets.
Euro (EUR) subdued on lacklustre German data
The euro (EUR) was muted yesterday after Germany’s latest ZEW economic sentiment index disappointed EUR investors.
Rather than rising from 47.1 to 50, the index only inched higher to 47.5. This below-forecast reading was enough to put pressure on the common currency.
Turning to today, Eurozone economic data is thin on the ground. This could leave the euro to trade without a clear directional bias.
US dollar (USD) dented by weaker sales data
The US dollar (USD) stumbled yesterday afternoon, surrendering earlier gains, following downbeat US retail sales data.
Sales growth in May was weaker than expected, printing at 0.1% rather than 0.2%. In addition, April’s figure was revised down from 0% to -0.2%.
With market-moving US data absent from the calendar today, risk appetite could drive most USD movement. Could a risk-off mood see the safe-haven ‘greenback’ strengthen?
Canadian dollar (CAD) struggles despite upbeat oil prices
Rising oil prices failed to lift the Canadian dollar (CAD) yesterday, despite the currency’s traditional ties to crude. Falling Canadian government bond yields seemed to weigh on CAD.
Later this evening, the Bank of Canada (BoC) will publish its latest meeting minutes. If they reveal a dovish consensus among BoC officials, the Canadian dollar could decline.
Australian dollar (AUD) enjoys RBA afterglow
The Australian dollar (AUD) rose overnight as the Reserve Bank of Australia’s (RBA) hawkish stance following yesterday’s policy decision continued to lend the currency support.
New Zealand dollar (NZD) softens amid souring market mood
The New Zealand dollar (NZD) edged slightly lower last night as a cautious market mood undermined the risk-sensitive ‘kiwi’.