Pound (GBP) strengthens in risk-on trade
The pound (GBP) trended broadly higher on Thursday as the currency was underpinned by improving market sentiment.
However, Sterling’s upside potential was ultimately limited by a report from the British Retail Consortium suggesting that UK consumer confidence was in decline due to concerns over the upcoming Autumn Budget.
Looking ahead, the Confederation of British Industry (CBI) will publish its latest distributive trades index later today. If September’s index reports retail sales volumes continue to contract, the pound may weaken.
Euro (EUR) weakens in risk-positive trade
The euro (EUR) slipped yesterday, as the improvement in market risk appetite limited demand for the safe-haven single currency.
Helping to temper these losses, however, was Germany’s latest consumer confidence index, as sentiment going into October was slightly better than expected.
This morning sees the publication of the Eurozone’s latest economic sentiment index. Expect the euro to come under pressure if a decline in morale raises concerns over the bloc’s economic trajectory.
US dollar (USD) slumps on Fed rate cut bets
The US dollar (USD) retreated through yesterday’s session amid rising expectations the Federal Reserve will deliver another bumper 50bps interest rate cut when it next meets in November.
The USD selling bias remained in place despite some positive US economic releases in the afternoon, with durable goods orders and initial jobless claims beating expectations and US GDP confirmed to have risen to 3% in the second quarter.
Turning to today’s session, the spotlight will be on the latest core PCE price index. A rise in the Federal Reserve’s preferred indicator for inflation could trim bets for another 50bps rate cut and help to lift the US dollar.
Canadian dollar (CAD) pressured by sliding oil prices
The Canadian dollar (CAD) stumbled on Thursday as the commodity-sensitive currency softened in tandem with global oil prices.
Coming up, Canada’s latest GDP figures may apply additional pressure to the ‘loonie’ this afternoon if they show that growth remained anaemic through July and August.
Australian dollar (AUD) weakened by profit-taking
The Australian dollar (AUD) slipped in overnight trade as a cautious shift in market sentiment saw some AUD investors take the opportunity to book some of their recent profits.
New Zealand dollar (NZD) dented by risk-off flows
The New Zealand dollar (NZD) also weakened overnight as a softening of market sentiment limited the appeal of the risk-sensitive currency.