Pound (GBP) subdued amid tax hike speculation
The pound (GBP) traded sideways at the start of this week’s session, as GBP investors grew increasingly wary of the UK’s upcoming Autumn Budget.
Markets are particularly concerned by reports that Chancellor Rachel Reeves will unveil several tax hikes on 30 October.
A speech by Bank of England (BoE) Governor Andrew Bailey will be a key focus for GBP investors today. Expect to see the pound come under pressure later this afternoon if Bailey reiterates that the BoE might cut rates aggressively if inflation remains under control.
Euro (EUR) flat as German PPI sinks
The euro (EUR) was muted on Monday, following the release of Germany’s latest producer price index.
The index reported producer prices retreated at a faster-than-expected pace last month, further weakening German inflation expectations.
Meanwhile, EUR investors will look to a speech by European Central Bank (ECB) President Christine Lagarde for fresh impetus today. If she strikes a broadly dovish tone, the single currency is likely to weaken.
US dollar (USD) strengthened by rising US Treasury yields
The US dollar (USD) got off to a positive start this week, with the currency rising in tandem with US Treasury yields.
Reinforcing the upside in the safe-haven ‘greenback’ was the negative shift in market risk appetite through the latter half of Monday’s trading session.
Looking ahead, with US data in short supply the US dollar may be influenced by wider market trends today. Expect to see USD exchange rates weaken if the mood improves.
Canadian dollar (CAD) muted despite rebound in oil prices
The Canadian dollar (CAD) traded in a narrow range on Monday, with the commodity-linked currency failing to find much purchase, despite a rebound in oil prices.
Coming up, the release of Canada’s latest producer price index may drag on the ‘loonie’ later this afternoon, as another decline in producer inflation is likely to reinforce bets for a bumper interest rate cut from the Bank of Canada (BoC) later in the week.
Australian dollar (AUD) firms amid optimistic market mood
The Australian dollar (AUD) rallied overnight on Monday, with the appeal of the risk-sensitive currency being bolstered by an improvement in market sentiment.
New Zealand dollar (NZD) climbs despite underwhelming trade data
The New Zealand dollar (NZD) also firmed in overnight trade, with the risk-on mood offsetting some weaker-than-expected domestic trade data.