Pound (GBP) rangebound in absence of data
The pound (GBP) wavered sideways yesterday amid a lack of UK economic data.
Meanwhile, concerns about the state of the UK government finances limited GBP’s upside potential, following reports that Chancellor Rachel Reeves is considering a 5.5% public sector pay rise, which could cost £10bn.
UK economic data remains thin on the ground today. As a result, GBP movement may be muted.
Euro (EUR) limited on ECB rate cut speculation
The euro (EUR) was subdued yesterday as some investors started pricing in a September interest rate cut from the European Central Bank (ECB).
In addition, a lack of notable Eurozone economic data limited the common currency’s movement.
This afternoon, the latest Eurozone consumer confidence report is out. Could a forecast improvement in morale see EUR strengthen?
US dollar (USD) flat amid Fed policy expectations
The US dollar (USD) was also muted yesterday amid expectations that the Federal Reserve will start unwinding its monetary policy in September.
Political uncertainty in the US also dampened USD demand, after Joe Biden dropped out of the 2024 presidential race over the weekend.
With US economic data still in short supply today, market risk dynamics could drive the safe-haven US dollar. Could a gloomy mood see the ‘greenback’ gain ground?
Canadian dollar (CAD) dented by weaker oil
The crude-linked Canadian dollar (CAD) trended lower yesterday as falling oil prices dragged on the currency.
Turning to today, the ‘loonie’ may be muted as CAD investors await the Bank of Canada’s (BoC) interest rate decision tomorrow.
Australian dollar (AUD) extends downside amid China woes
The Australian dollar (AUD) continued to trend lower last night as concerns over China’s economic outlook fuelled risk aversion.
New Zealand dollar (NZD) falls amid risk-off trade
The New Zealand dollar (NZD) also weakened overnight as the downbeat market mood weighed on the risk-sensitive ‘kiwi’.