Pound (GBP) muted amid UK Budget concerns
The pound (GBP) was subdued on Friday amid anxiety ahead of the UK’s Autumn Budget at the end of October.
Chancellor Rachel Reeves is reportedly reconsidering the removal of non-dom tax status due to fears it will not raise any revenue, meaning Labour may look to borrow more or raise taxes elsewhere.
Earlier this morning, the final UK GDP results for the second quarter showed slower-than-expected growth. This could put some pressure on the pound today.
Euro (EUR) pressured as French and Spanish inflation fall
The euro (EUR) also struggled at the end of last week as both French and Spanish inflation cooled more than forecast in September.
The preliminary figures showed that price pressures continue to ease in two of the Eurozone’s largest economies, boosting bets on another European Central Bank (ECB) interest rate cut in October.
Coming up, Germany’s preliminary inflation rate is due out this afternoon. If German inflation also eased this month, ECB rate cut bets could weigh heavily on the euro.
US dollar (USD) slips as inflation cools
The US dollar (USD) fell on Friday as the latest US inflation data showed that price pressures cooled in August.
The latest PCE price index reported headline inflation slowed to 2.2% last month. This was the slowest pace of price growth since February 2021 and was seen as bolstering the odds of another 50bps interest rate cut from the Federal Reserve in November.
Looking forward, Fed Chair Jerome Powell is due to speak this evening. Could hints of another half-point cut pile fresh pressure on USD?
Canadian dollar (CAD) undermined by USD correlation
Rising oil prices helped the crude-linked Canadian dollar (CAD) at the start of Friday’s session, only for CAD to tumble later due to its positive correlation with USD.
Canadian economic data is absent from the calendar today. Therefore, oil prices and USD movement could influence the ‘loonie’ again.
Australian dollar (AUD) climbs amid risk-on trade
The Australian dollar (AUD) strengthened last night as an upbeat market mood boosted the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) boosted by rising business confidence
The New Zealand dollar (NZD) gained ground last night after New Zealand business confidence smashed forecasts for September.