Pound (GBP) rises as markets trim BoE bets
The pound (GBP) rallied yesterday following hawkish comments from Bank of England (BoE) Chief Economist Huw Pill.
In a speech at Asia House in London, Pill said that it was an ‘open question’ whether the BoE was ready to cut interest rates, citing concerns about ‘uncomfortable strength’ in wage growth. The odds for a cut in August fell from 62% to 50% in the wake of his speech, thereby boosting Sterling.
This morning the pound could post further gains after the latest UK GDP figures exceeded expectations. The British economy rebounded to 0.4% growth in May, above expectations of 0.2%.
Euro (EUR) uncertain in absence of data
The euro (EUR) was unclear yesterday as an ongoing lack of data and continued French political uncertainty left the single currency rudderless.
However, EUR was cushioned thanks to its strong negative correlation with a softening US dollar (USD).
Aside from the final German inflation rate for June, which came in as expected this morning, Eurozone economic data is thin on the ground again today. As a result, EUR could face mixed movement.
US dollar (USD) softens ahead of inflation figures
The US dollar retreated yesterday as USD investors turned cautious ahead of the US consumer price index, due out this afternoon.
With the CPI expected to show a cooldown in inflation, the ‘greenback’ was unable to attract support.
If the latest CPI figures do show that prices pressures eased last month, with headline inflation cooling from 3.3% to 3.1%, the US dollar could face more notable losses today.
Canadian dollar (CAD) strengthens as oil prices rise
The Canadian dollar (CAD) climbed yesterday as rising oil prices boosted the crude-linked ‘loonie’.
Looking ahead, CAD’s positive correlation with USD could drive the currency today. Will cooling US inflation also dent the ‘loonie’?
Australian dollar (AUD) firms amid risk-on trade
The Australian dollar (AUD) rose during the overnight session as a cheery market mood boosted the risk-sensitive currency’s appeal.
New Zealand dollar (NZD) recovers as market mood improves
The New Zealand dollar (NZD) also managed to gain ground, recouping some of Wednesday’s losses, thanks to the risk-on market impulse.