Pound (GBP) slumps as UK borrowing costs soar
The pound (GBP) suffered a bruising session yesterday as market anxiety in the wake of the Autumn Budget began to take its toll on the currency.
UK gilts faced a sharp selloff as worries about rising borrowing spooked investors. This was exacerbated by hotter inflation figures from the Eurozone and the US.
Sterling could have a quieter end to the week as the volatility of the budget wears off. However, concerns about higher borrowing costs could keep GBP on the back foot.
Euro (EUR) soars following strong CPI
The euro (EUR) leapt higher yesterday after the Eurozone’s consumer price index exceeded expectations.
Headline inflation in the bloc accelerated from 1.7% to 2% in October, above forecasts of 1.9%. Following on from Wednesday’s stronger GDP figures, this hot CPI catapulted EUR higher.
Turning to today, the euro may struggle to find a clear direction in the absence of any new data, although the strong GDP and CPI figures may keep EUR underpinned.
US dollar (USD) firms amid signs of sticky inflation
The US dollar (USD) rose against its weaker rivals yesterday after the core PCE price index – the Federal Reserve’s preferred measure of inflation – unexpectedly held at 2.7% in September rather than easing to 2.6%, as was forecast.
However, USD’s gains were capped as Wednesday’s surprise slowdown in third-quarter GDP kept a lid on the ‘greenback’.
More high-impact US data is due out today, with October’s non-farm payrolls report forecast to show a sharp slowdown in hiring. This could dent the US dollar, although USD will likely surge if payrolls exceed expectations, as they did in September.
Canadian dollar (CAD) mixed amid muted oil prices
The crude-linked Canadian dollar (CAD) was mixed yesterday, rising against its weaker peers but struggling elsewhere, amid a lack of data and muted oil prices.
Today, Canada’s latest manufacturing PMI could impact CAD. With factory activity expected to remain at a near standstill in October, the Canadian dollar may struggle to attract support.
Australian dollar (AUD) slips despite stronger PPI
The Australian dollar (AUD) fell last night, despite the latest Australian PPI reading exceeding forecasts, as risk aversion swept markets.
New Zealand dollar (NZD) stumbles amid anxious trade
The New Zealand dollar (NZD) wavered lower last night as a prevailing risk-off mood dragged on the ‘kiwi’.