Pound (GBP) under pressure amid bond market volatility
The pound (GBP) stumbled at the start of the week, sliding to fresh multi-month lows as UK borrowing costs climbed once again.
Despite this shaky start, Sterling managed to claw back most of its losses by the close of trading as bond yields eased later in the day.
UK bond market fluctuations are expected to remain a key driver of GBP exchange rates today, potentially infusing further volatility in the pound.
Euro (EUR) knocked by strong US dollar
The euro (EUR) faltered on Monday, weighed down by its inverse relationship with the resurgent US dollar (USD).
Further dragging on the single currency was a disappointing report, which revealed a continued decline in business confidence across the Eurozone.
Looking ahead, a speech by European Central Bank (ECB) official Philip Lane could influence EUR trading. A dovish tone from Lane may place additional pressure on the euro.
US dollar (USD) rallies on fading Fed rate cut bets
The US dollar (USD) surged at the start of the week, maintaining its upward trajectory from Friday’s impressive payroll data.
The strong jobs report tempered expectations for Federal Reserve interest rate cuts in the near term, bolstering demand for the ‘greenback.’
Focus will now turn to the release of the US producer price index. As a precursor to Wednesday’s critical US consumer price index, signs of persistent inflationary pressures could reinforce USD strength.
Canadian dollar (CAD) supported by rising oil prices
The Canadian dollar (CAD) strengthened on Monday, buoyed by climbing oil prices and its positive correlation with the US dollar.
Should crude prices continue to rise, the commodity-linked ‘loonie’ may extend its gains in today’s session.
Australian dollar (AUD) climbs on improved risk sentiment
The Australian dollar (AUD) advanced during Monday’s Asian trading session as a pullback in the US dollar helped bolster market risk appetite.
New Zealand dollar (NZD) boosted by upbeat business sentiment
The New Zealand dollar (NZD) recovered ground in overnight trade, supported by a marked improvement in domestic business confidence in the final quarter of 2024.
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