Pound (GBP) slides as jobs data bolsters rate cut bets
The pound (GBP) slumped during yesterday’s session, as a disappointing UK jobs report bolstered Bank of England (BoE) interest rate cut expectations.
Unemployment in the UK rose from 4.5% to 4.6% in April – its highest level since August 2021 – while wage growth slowed from 5.5% to 5.2%, below expectations for 5.4%.
Today the UK government’s spending review could impact GBP. A positive reception to pro-growth measures could lift the pound, while concerns over the potential need for further tax hikes could offset any optimism.
Euro (EUR) see-saws on USD correlation
After losing ground overnight, the euro (EUR) then managed to march higher during yesterday’s session thanks to a decline in the US dollar (USD), with which EUR is negatively correlated.
In addition, the latest Eurozone investor confidence index from Sentix showed a sharp improvement in June, along with comments from European Central Bank (ECB) policymakers Olli Rehn and Francois Villeroy de Galhau who both reinforced the bank’s recent hawkish shift in tone.
Amid a lack of data today, EUR investors may look to more ECB speeches, including from Chief Economist Philip Lane. Any more suggestions that policy is now near neutral could boost the euro.
US dollar (USD) recovers on US-China breakthrough
The US dollar weakened yesterday as US-China trade talk tailwinds fizzled out and a broadly risk-on market mood deprived the ‘greenback’ of safe-haven flows.
However, USD rebounded last night on news that the two sides had agreed a framework to reinforce the trade truce agreed last month.
Turning to today, USD investors will be laser-focused on the latest US inflation figures. An expected uptick in inflation will likely boost the US dollar by dampening the prospect of a Federal Reserve rate cut in the near future.
Canadian dollar (CAD) buoyed by rising oil prices
The crude-linked Canadian dollar (CAD) rose against its weaker rivals yesterday thanks to an appreciation in oil prices.
Oil price movements may continue to impact the ‘loonie’ today. Could a continued recovery in crude pull the Canadian dollar higher?
Australian dollar (AUD) slips as USD rallies
The Australian dollar (AUD) came under pressure overnight as the US dollar’s rebound dented the ‘Aussie’.
New Zealand dollar (NZD) falls amid stronger US dollar
Likewise, the New Zealand dollar (NZD) fell last night due to the currency’s negative correlation with USD.
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