Pound (GBP) hammered by BoE rate cut
The pound (GBP) plummeted to multi-week lows yesterday as investors began anticipating an interest rate cut from the Bank of England (BoE) at its upcoming policy announcement.
Although the bank did cut rates by 25bps, as expected, Sterling managed to rebound from its worst levels. Four of the nine BoE rate-setters voted to leave rates unchanged, and the accompanying policy statement suggested that the bank may wait before cutting again.
Today, BoE Chief Economist Huw Pill is due to deliver a speech. Pill was one of the four dissenting voices at yesterday’s decision. Could any hawkish comments help the pound claw back some losses?
Euro (EUR) stifled by rising unemployment
An unexpected uptick in Eurozone unemployment put some pressure on the euro (EUR) yesterday, seeing it slip against its stronger rivals.
In addition, a stronger US dollar (USD) weighed on the single currency, due to EUR’s negative correlation with USD.
Looking ahead, the euro closes the week with little in the way of economic data. As a result, the common currency may trade without a clear direction.
US dollar (USD) recovers from Fed decision
The US dollar gained ground yesterday, with the currency recouping the losses it suffered in the wake of the Federal Reserve’s interest rate decision on Wednesday evening.
USD’s upside came as a souring market mood provided the currency with safe-haven flows. Weak manufacturing data from China and tensions in the Middle East sapped investor risk appetite.
Turning to today, the latest non-farm payrolls report is in the spotlight. If July’s data shows a slowdown in US hiring activity, the US dollar could face selling pressure.
Canadian dollar (CAD) mixed as oil falls and USD rises
The crude-linked Canadian dollar (CAD) fluctuated yesterday as falling oil prices offset the upside of CAD’s positive correlation with the rising US dollar.
During today’s session, the Canadian dollar’s fortunes may be tied to the ‘greenback’. If USD falls will CAD follow suit?
Australian dollar (AUD) climbs following PPI data
The Australian dollar (AUD) firmed overnight, despite a risk-off market mood, as a hotter-than-forecast producer price index reinforced bets that the Reserve Bank of Australia (RBA) could hike interest rates again.
New Zealand dollar (NZD) buoyed by AUD correlation
The New Zealand dollar (NZD) also moved higher overnight, with the ‘kiwi’ enjoying its strong positive trading relationship with the ‘Aussie’.