Pound (GBP) slips amid rising BoE rate cut expectations
The pound (GBP) got off to a poor start this week, amid growing bets the Bank of England (BoE) will cut interest rates at a faster pace than previously thought.
Following some particularly dovish comments from BoE Governor Andrew Bailey last week, some analysts suggest that there is support within the bank for consecutive rate cuts in November and December.
In lieu of any impactful UK economic releases, the pound may remain on the defensive today as GBP investors continue to reprice their BoE rate cut expectations.
Euro (EUR) fluctuates on mixed data
Trade in the euro (EUR) was mixed on Monday, following the publication of some uneven EUR data releases.
EUR sentiment was initially dented by a much larger-than-expected contraction in German factory orders, before finding relief from a rebound in Eurozone retail sales.
Today’s session opened with the publication of Germany’s latest industrial production figures, where a surprisingly strong rebound in factory output is lending some support to the euro so far this morning.
US dollar (USD) strengthens on reduced Fed rate cut speculation
The US dollar (USD) trended broadly higher on Monday as USD investors trimmed their bets for another bumper rate cut from the Federal Reserve next month.
Bets for another 50bps interest rate cut have now been almost completely erased in the wake of Friday’s stronger-than-expected payroll figures.
US data is in short supply today, potentially leading movement in the US dollar to be dictated by market risk dynamics. If events in the Middle East leave investors on edge, we may see USD demand strengthen.
Canadian dollar (CAD) supported by rising oil prices
The commodity-linked Canadian dollar (CAD) was underpinned on Monday by a continued acceleration in oil prices amid concerns over potential supply disruptions in the Middle East.
Looking ahead, the ‘loonie’ may strengthen today if oil prices continue to march higher.
Australian dollar (AUD) slides amid risk-off sentiment
The Australian dollar (AUD) stumbled overnight on Monday as heightened geopolitical tensions limited the appeal of the risk-sensitive ‘Aussie’, despite the broadly hawkish tone of the minutes from the Reserve Bank of Australia’s (AUD) latest policy meeting.
New Zealand dollar (NZD) dented by gloomy trade
The New Zealand dollar (NZD) also softened in overnight trade as a result of the prevailing risk-off market mood.