Pound (GBP) strengthened by BoE rate speculation
The pound (GBP) closed last week’s session on a positive note as Thursday’s impressive UK PMI figures continued to provide tailwinds.
This highlighted the expected divergence between the Bank of England (BoE) and Federal Reserve in September, with the former expected to keep rates on hold while the latter begins cutting.
Meanwhile, the pound may struggle today if the Confederation of British Industry’s (CBI) distributive trades reports that UK retail sales volumes remained negative this month.
Euro (EUR) dented by risk-on flows
The euro (EUR) slipped on Friday as a prevailing risk-on mood limited the appeal of the safe-haven currency.
However, the single currency’s negative correlation with the US dollar helped ensure the pullback in EUR exchange rates was fairly modest in scope.
Meanwhile, confirmation that Germany’s economy shrank in the second quarter could place pressure on the euro this morning.
US dollar (USD) plunges on dovish Powell remarks
The US dollar nosedived at the end of last week as markets responded to Federal Reserve Chair Jerome Powell’s keynote speech at the US central bank’s annual Jackson Hole symposium.
USD exchange rates slumped as Powell conceded that inflation is ‘on a sustainable path back to 2%’ and that the ‘time has come’ for the bank to start adjusting monetary policy.
US economic data is thin on the ground today, but the US dollar may still strengthen if heightened geopolitical tensions results in investors favouring the safe-haven currency.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) ticked higher on Friday as strengthening oil prices reflected positively on the commodity-linked currency.
In the absence of any notable Canadian economic data, movement in the ‘Loonie’ is likely to remain linked to oil price dynamics today.
Australian dollar (AUD) fluctuates amid mixed risk appetite
The Australian dollar (AUD) initially faltered overnight on Monday amid a souring market mood, before clawing back these losses through the Asian trading session as sentiment began to improve
New Zealand dollar (NZD) wavered amid uneven market mood
Movement in the New Zealand dollar (NZD) echoed that of the ‘Aussie’ in overnight trade, with the ‘kiwi;’ reversing its initial losses as market risk appetite improved.