Pound (GBP) supported by BoE rate speculation
The pound (GBP) ticked higher against most of its peers through yesterday’s session, supported by modest Bank of England (BoE) interest rate cut expectations.
GBP investors continue to see the BoE’s current cutting cycle as being at a slower pace than either the Federal Reserve or European Central Bank (ECB)
The publication of the UK’s latest services PMI may help to underpin the pound this morning as August’s finalised figures are expected to confirm growth in the vital sector struck a four-month high.
Euro (EUR) undermined by Germany fears
The euro (EUR) was muted on Tuesday amid growing concern over the state of Germany’s economy.
EUR investors are growing increasingly worried that the Eurozone’s largest economy is struck in a rut, highlighted by the potential closure of two Volkswagen factories in the country.
Turning to today’s session, the publication of the Eurozone’s latest producer price index may act as the euro’s main catalyst for movement today. Expect a slowdown in producer price growth to drag on the single currency as it stokes ECB rate cut bets.
US dollar (USD) buoyed in risk-averse trade
The US dollar (USD) firmed during yesterday’s session as a risk-averse market mood saw investors favour the safe-haven currency.
However, the upside potential of the ‘greenback’ was capped through the afternoon as the latest ISM manufacturing PMI reported growth in the US factory sector continued to contract last month.
Coming up, the spotlight today is likely to be on the latest US Job Openings and Labour Turnover survey (JOLTs), with the US dollar likely to stumble if they show that US job openings fell again in July.
Canadian dollar (CAD) Slips ahead of BoC rate decision
The Canadian dollar (CAD) came under pressure on Tuesday, as CAD investors erred on the side of caution ahead of the Bank of Canada’s (BoC) latest interest rate decision.
Looking ahead, the BoC is widely expected to announce a rate cut when it concludes its September policy meeting later this afternoon. Expect this to weigh on the ‘loonie’ particularly if the bank signals more cuts are likely to come.
Australian dollar (AUD) pressured by weaker-than-expected GDP
The Australian dollar (AUD) trended broadly lower overnight on Tuesday, as Australia’s latest GDP figures reported growth in the second quarter was weaker than expected.
New Zealand dollar (NZD) wavers in risk-off trade
The New Zealand dollar (NZD) also came under pressure in overnight trade as a skittish market mood limited the appeal of the risk-sensitive ‘kiwi’.