Pound (GBP) stabilises following recent gains
The pound (GBP) traded in a narrow range at the end of last week, with the currency consolidating some of its gains from earlier in the week.
Further gains appeared limited, however, with some analysts warning the currency may have become overvalued in recent weeks.
The pound may continue to trade sideways at the start of the session as GBP investors await high-impact UK data later in the week.
Euro (EUR) mixed amid weak EUR data
Trade in the euro (EUR) was mixed on Friday. Acting as a headwind for the single currency were the European Central Bank’s (ECB) recent interest rate cut and lacklustre Eurozone industrial production figures.
However, helping to underpin the euro was its negative correlation with a weakened US dollar (USD).
Turning to this week, the focus for EUR investors in the first half of the week will be Germany’s latest ZEW economic sentiment index, with Tuesday’s data potentially pulling the euro lower if it reports another deterioration in morale this month.
US dollar (USD) slips amid Fed rate cut bets
The US dollar was left to nurse its wounds at the end of last week, after stumbling on Thursday in response to a weaker-than-expected domestic producer price index.
Surprisingly soft producer prices in August revived bets the Federal Reserve could deliver a 50 basis point interest rate cut this week, limiting USD demand on Friday.
Looking ahead, movement in the US dollar may be limited through the first half of this week, with USD investors reluctant to alter their positions in the currency amid the uncertainty of the Fed’s impending interest rate decision.
Canadian dollar (CAD) supported by rising oil prices
The Canadian dollar (CAD) held its ground on Friday as its positive correlation with the US dollar was offset by rising oil prices.
In the absence of any notable domestic data, movement in the ‘loonie’ may continue to be dictated by oil price dynamics. Will a continued uptick in crude help strengthen CAD?
Australian dollar (AUD) buoyed by USD weakness
The Australian dollar (AUD) is off to a positive start this week, rising through this morning’s Asian session as a subdued US dollar helps to bolster market risk appetite.
New Zealand dollar (NZD) firms amid positive risk flows
The New Zealand dollar (NZD) also firmed in overnight trade, buoyed by the cautiously optimistic market mood.