Pound (GBP) claws back losses on BoE comments
The pound (GBP) initially remained on the back foot on Friday as the Bank of England’s (BoE) interest rate cut on Thursday continued to pressure Sterling.
However, hawkish comments from BoE Chief Economist Huw Pill – one of the four rate-setters who voted to leave policy unchanged – helped GBP recoup some of its losses.
This morning, the UK’s final services PMI for July is scheduled for release. Could confirmation of an acceleration in activity help lift the pound?
Euro (EUR) boosted by USD correlation
The euro (EUR) strengthened on Friday as EUR benefitted from its strong negative correlation with a tumbling US dollar (USD).
In addition, a risk-off market mood supported the safer single currency.
Turning to today, the Eurozone’s latest producer price index could impact EUR. Any signs of cooling producer prices could fuel European Central Bank (ECB) rate cut bets and therefore weigh on EUR.
US dollar (USD) tumbles as payrolls report misses forecasts
The US dollar plunged at the end of last week after a weak non-farm payrolls report boosted bets on a coming rate cut from the Federal Reserve.
The US economy only added 114,000 jobs in July, well below forecasts of 175,000, while June’s figure was revised down from 206,000 to 179,000.
This afternoon, the ISM services PMI for July could help USD regain ground. The survey is expected to show that US service sector activity returned to growth last month.
Canadian dollar (CAD) falls as oil prices weaken
The crude-linked Canadian dollar (CAD) was dragged lower by falling oil prices on Friday. CAD’s positive correlation with USD also pressured the currency.
Oil prices remain muted at the start of this week’s session. Could this place the ‘loonie’ on the defensive today?
Australian dollar (AUD) slumps amid risk aversion
The risk-sensitive Australian dollar (AUD) fell sharply last night as risk aversion swept markets amid concerns over the health of the US economy.
New Zealand dollar (NZD) plunges amid souring market mood
The New Zealand dollar (NZD) also tumbled during overnight trade amid the deterioration in global risk appetite.