Pound (GBP) weakens amid BoE rate cut speculation
The pound (GBP) fluctuated lower yesterday as a global market selloff fuelled bets that the Bank of England (BoE) will deliver two more interest rate cuts this year.
In addition, anxious investors avoided the increasingly risk-sensitive UK currency, even though the finalised British services PMI was revised higher.
Today, UK economic data is in short supply. As a result, Sterling could trade without a clear direction.
Euro (EUR) boosted by USD weakness
The euro (EUR) rallied yesterday as the safer common currency enjoyed the risk-off market mood and its negative correlation to a faltering US dollar (USD).
A stronger-than-expected producer price index also lifted EUR, with wholesale inflation in the Eurozone rising 0.5% month on month in June.
This morning, an impressive 3.9% recovery in German factory orders in June has lent EUR some support. Could an expected contraction in Eurozone retail sales later this morning put a lid on the euro’s gains?
US dollar (USD) rocked by market rout
The US dollar faced significant turbulence yesterday, briefly striking a seven-month low before clawing back some losses, amid global market volatility.
Investors were panicked in the wake of last Friday’s payrolls print, which stoked fears that the US economy could enter recession. Speculation that the Federal Reserve might step in with an emergency rate cut to calm markets piled pressure on USD.
Markets seem to have stabilised today, as has the US dollar. However, if we see a recovery in risk appetite then the safe-haven ‘greenback’ could meet resistance.
Canadian dollar (CAD) impacted by USD volatility
Falling oil prices and the volatility in USD dented the Canadian dollar (CAD) yesterday. However, it was able to hold its own against its weaker rivals.
Later this afternoon, Canada’s services PMI for July could impact the ‘loonie’. Will a deeper contraction in activity pile pressure on CAD?
Australian dollar (AUD) edges up following RBA meeting
The Australian dollar (AUD) firmed overnight after the Reserve Bank of Australia (RBA) left interest rates unchanged but said that they will likely remain high for a long time.
New Zealand dollar (NZD) wavers despite improving market mood
The New Zealand dollar (NZD) initially rose before wiping out its gains last night as an improvement in the market mood failed to provide the risk-sensitive ‘kiwi’ with a sustainable upside.