Pound (GBP) rebounds amid budget optimism
The pound (GBP) rallied yesterday, shrugging off a surprisingly weak services PMI, amid hopes that the UK Autumn Budget would boost investment.
Confirmation that Chancellor Rachel Reeves will change the government’s fiscal rules to allow her to borrow up to £50bn in the upcoming budget cheered GBP investors, with the plans being backed by banking giants Lloyds and Barclays.
If budget optimism continues today, Sterling could enjoy support through to the end of the session.
Euro (EUR) cushioned by USD weakness
The safer euro (EUR) initially fell yesterday amid an upbeat market mood and lacklustre PMI surveys.
However, the euro’s negative correlation with a weakening US dollar (USD) helped the single currency regain ground in the afternoon.
This morning, EUR may struggle to attract support if Germany’s business climate indicator remains close to the eight-month low hit in September.
US dollar (USD) falls amid improving market mood
The US dollar retreated from recent highs yesterday as an increased appetite for risk undermined the safe-haven ‘greenback’.
In addition, a pullback in US Treasury yields added to the US dollar’s woes.
Looking ahead, the ‘greenback’ could end the week on a sour note as the latest US durable goods orders release is forecast to show a 1% contraction in September.
Canadian dollar (CAD) struggles in wake of BoC rate cut
The Canadian dollar (CAD) softened yesterday as the Bank of Canada’s (BoC) bumper 50bps interest rate cut on Wednesday continued to pressure the currency.
Canadian retail sales could impact CAD this afternoon. Although August’s figure is expected to show a slowdown in sales growth, the predicted 0.5% rise could still support the ‘loonie’.
Australian dollar (AUD) stumbles as risk appetite fades
The Australian dollar (AUD) trended lower overnight as a souring mood put pressure on the riskier ‘Aussie’.
New Zealand dollar (NZD) hits multi-month lows as confidence declines
The New Zealand dollar (NZD) tumbled to multi-month lows overnight. In addition to the risk-off market mood, an unexpected decline in New Zealand consumer confidence weighed on NZD.