Pound (GBP) muted despite hawkish BoE remarks
Hawkish comments from Bank of England (BoE) policymaker Catherine Mann failed to lift the pound (GBP) yesterday, with GBP remaining subdued against most of its peers.
Mann said markets shouldn’t be ‘seduced’ by the recent decline in headline inflation as price pressures in the services sector are stickier. However, movement in the pound was muted ahead of upcoming high-impact data.
This morning, the pound is rallying after the UK’s latest labour data beat forecasts, thereby dampening BoE rate cut bets. Unemployment unexpectedly fell from 4.4% to 4.2%, rather than rising to 4.5%, while wage growth slowed less than expected.
Euro (EUR) quiet in absence of data
The euro (EUR) was rangebound yesterday as a lack of Eurozone economic data left the currency without much support.
In addition, a cautiously upbeat market mood kept a lid the safe single currency.
Later this morning, Germany’s latest ZEW economic sentiment index is due out. Another deterioration in morale in the Eurozone’s largest economy could pile pressure on the euro.
US dollar (USD) slips amid risk-positive trade
The US dollar (USD) weakened yesterday as a risk-on market impulse drained demand for the safe-haven ‘greenback’.
Meanwhile, a modest decline in US Treasury bond yields also put some downward pressure on the American currency.
Looking forward, the US producer price index for July could dent USD this afternoon, if a cooldown in producer prices is seen as increasing the likelihood of a 50bps interest rate cut from the Federal Reserve next month.
Canadian dollar (CAD) dragged down by USD correlation
The typically crude-linked Canadian dollar (CAD) failed to rise yesterday, despite an uptick in oil prices. CAD’s positive trading relationship with USD saw the currency struggle.
Canadian economic data remains thin on the ground today, potentially leaving the ‘loonie’ vulnerable to losses.
Australian dollar (AUD) buoyed by rising consumer confidence
The Australian dollar (AUD) firmed last night after the latest Australian consumer confidence index showed a larger-than-expected rise in morale this month.
New Zealand dollar (NZD) rises amid risk-on mood
The New Zealand dollar (NZD) also rose last night, with the risk-sensitive New Zealand dollar (NZD) enjoying an upbeat market mood.