Pound (GBP) buoyed as UK unemployment falls
The pound (GBP) initially firmed yesterday as the UK’s latest jobs report showed that unemployment fell to a six-month low in July
However, the upside in Sterling proved short-lived, as concerns over a slowdown in wage growth saw the pound relinquish the bulk of its gains by the afternoon.
Today’s session opened with the publication of the UK’s latest GDP figures, where a surprise flatlining of growth in July is likely to exert pressure on the pound today.
Euro (EUR) muted as German inflation slows
The euro (EUR) struggled to find momentum on Tuesday as the only EUR data of note was Germany’s latest consumer price index.
August’s finalised CPI figures confirmed that inflation slowed to just 1.9%, its lowest level since March 2021.
Looking ahead, with the European Central Bank’s (ECB) latest interest rate decision looming, movement in the euro is likely to remain limited through today’s session.
US dollar (USD) steady ahead of key US inflation print
The US dollar (USD) traded in a narrow range yesterday as investors were reluctant to bid on the currency ahead of today’s US CPI print.
This resulted in limited upside for the ‘greenback’ on Tuesday, despite a cautious market mood and uptick in US Treasury yields.
Turning to today’s session, all eyes will be on the latest US CPI figures, which are expected to report a cooling of inflation. August’s inflation figures may influence the size of a widely expected interest rate cut from the Federal Reserve this month, so a weaker-than-expected reading may place significant pressure on the US dollar.
Canadian dollar (CAD) weakens on BoC Macklem comments
The Canadian dollar (CAD) ticked lower on Tuesday, after Bank of Canada (BoC) Governor Tiff Macklem warned that the bank could pursue larger interest rate cuts if the data warrants it.
Coming up, the ‘loonie’ may continue to face headwinds today if oil prices continue to plunge.
Australian dollar (AUD) muted following RBA comments
The Australian dollar (AUD) traded sideways overnight on Tuesday as the Reserve Bank of Australia’s (RBA) Sarah Hunter noted that high interest rates may be suppressing domestic economic activity.
New Zealand dollar (NZD) firms in risk-on trade
The New Zealand dollar (NZD) ticked higher in overnight trade as prevailing risk-on flows buoyed the appeal of the risk-sensitive ‘kiwi’.