Pound (GBP) sidelined ahead of BoE rate decision
The Bank of England’s (BoE) impending interest rate decision left the pound (GBP) to trade sideways during yesterday’s session.
While the decision was seen as being on a knife edge earlier this week, the odds of a rate cut this month has since risen to around 60%.
Unsurprisingly the spotlight today will be on the BoE’s rate decision at midday. Expect to see the pound sink if the bank ultimately chooses to cut rates.
Euro (EUR) bolstered by shock rise in Eurozone inflation
The euro (EUR) strengthened on Wednesday as EUR investors responded positively to the Eurozone’s latest inflation figures.
A shock acceleration of inflation last month was seen as weakening the odds of the European Central Bank (ECB) opting for another interest rate cut next month.
Coming up, the Eurozone will publish its latest employment data later this morning. If unemployment in the bloc remained at an all-time low in June this could help to extend the euro’s gains.
US dollar (USD) undermined by dovish Fed rate decision
The US dollar (USD) came under pressure yesterday as the Federal Reserve delivered its latest interest rate decision.
While the Fed left its monetary policy untouched this month as expected, the ‘greenback’ fell as its forward guidance struck a dovish note and conceded that a September rate cut may be on the cards.
The fallout from the Fed’s rate decision may continue to influence USD exchange rates through the start of today’s session. The US dollar might then face resistance later this afternoon if the latest ISM manufacturing PMI reports the US factory sector contracted again last month.
Canadian dollar (CAD) buoyed by rising oil prices
Soaring oil prices helped propel the commodity-linked Canadian dollar (CAD) higher on Wednesday.
In the absence of any notable domestic data, movement in the ‘loonie’ is likely to remain tied to oil price dynamics during today’s session.
Australian dollar (AUD) undermined by mixed trade figures
After firming in the wake of the Fed rate decision, the Australian dollar (AUD) then came under pressure overnight as Australia’s latest trade data failed to impress.
New Zealand dollar (NZD) supported by risk-on flows
The New Zealand dollar (NZD) also firmed in the wake of the Fed rate decision yesterday, with the ‘kiwi’ able to consolidate these gains overnight thanks to a prevailing risk-on market mood.