Pound (GBP) strengthens on upbeat employment data
The pound (GBP) jumped yesterday after stronger-than-forecast UK jobs data dampened expectations for multiple interest rate cuts from the Bank of England (BoE) this year.
British unemployment unexpectedly fell from 4.4% to 4.2% in the three months to June, while wage growth slowed far less than forecast during the same period. This apparent resilience in the UK labour market boosted GBP.
This morning, the pound is relinquishing its gains following the UK’s latest consumer price index. July’s CPI missed forecasts, with headline inflation rising less than expected and core inflation cooling, which is prompting fresh bets on a September rate cut from the BoE.
Euro (EUR) falls as German morale crumbles
The euro (EUR) stumbled on Tuesday after Germany’s latest economic sentiment index revealed a surprisingly large decline in morale, with the score slumping from 41.8 to 19.2 this month.
However, the single currency was spared steeper losses, and even rebounded against some rivals, thanks to its strong negative correlation with a weaker US dollar (USD).
Turning to today, an expected recovery in Eurozone industrial production could help EUR regain ground. Meanwhile, the latest GDP estimate could impact the euro if it differs from the initial results.
US dollar (USD) slides as producer prices cool
The US dollar faced selling pressure yesterday as a cautiously upbeat market mood sapped demand for the safe-haven ‘greenback’.
USD was hit by additional headwinds later in the session, as a larger-than-forecast cooldown in US producer prices fuelled expectations that American inflation is easing.
Looking forward, all eyes are on the US CPI figures for July. If they show that consumer prices cooled last month, increased bets on a large 50bps rate cut from the Federal Reserve next month could see USD slump.
Canadian dollar (CAD) weakens in tandem with oil prices
The crude-linked Canadian dollar (CAD) was dragged lower by falling oil prices on Tuesday, as the International Energy Agency warned there had been a ‘marked slowdown’ in oil demand growth from China.
With Canadian data absent from the calendar today, oil prices and CAD’s correlation with USD could drive movement in the ‘loonie’.
Australian dollar (AUD) choppy amid market volatility
The Australian dollar (AUD) wavered overnight as the Reserve Bank of New Zealand (RBNZ) interest rate decision caused a ripple in Australian markets.
New Zealand dollar (NZD) plunges as RBNZ cuts rates
The New Zealand dollar (NZD) plummeted last night after the RBNZ surprised markets by cutting interest rates.