Pound (GBP) steady after UK jobs and inflation data
The pound (GBP) traded with mixed movement yesterday, although it gained ground against weaker currencies, as markets reacted to the UK’s latest employment figures.
The data indicated a mild cooling in Britain’s labour market, though this was not enough to alter expectations that the Bank of England (BoE) will keep interest rates on hold at tomorrow’s policy meeting.
This morning, Sterling is holding firm following the UK’s consumer price index release. Inflation matched forecasts in August, with the headline rate remaining at 3.8%.
Euro (EUR) lifted by upbeat German sentiment
The euro (EUR) climbed sharply yesterday after Germany’s ZEW economic sentiment index unexpectedly improved.
The single currency was also supported by broad weakness in the US dollar (USD), with which it maintains an inverse relationship.
Attention now turns to European Central Bank (ECB) President Christine Lagarde’s comments today. Any hawkish signals could provide further support to EUR.
US dollar (USD) plunges on Fed independence worries
The US dollar tumbled to multi-month lows yesterday – hitting a four-year low against the euro – after the US Senate narrowly approved Stephen Miran’s appointment to the Federal Reserve’s board of governors ahead of this week’s rate vote.
Miran is a close ally of President Donald Trump, who has repeatedly pressed the Fed to deliver steep interest rate cuts. The possibility of accelerated easing, coupled with concerns about the Fed’s independence, weighed heavily on USD.
The ‘greenback’ could remain subdued today as investors look to this evening’s Fed decision, where a rate cut is widely expected and may push the dollar even lower.
Canadian dollar (CAD) subdued amid conflicting drivers
The Canadian dollar (CAD) traded without clear direction yesterday. Rising inflation and higher oil prices offered support, but CAD’s positive link with the struggling USD dragged on the ‘loonie’.
Looking ahead, the Bank of Canada (BoC) is anticipated to lower rates at today’s meeting, which may place fresh pressure on CAD later in the day.
Australian dollar (AUD) dips on weak data
The Australian dollar (AUD) lost ground overnight after Australia’s leading economic index posted an unexpected decline in August.
New Zealand dollar (NZD) eases as USD steadies
The New Zealand dollar (NZD) also edged lower overnight as a modest US dollar rebound dampened demand for the ‘kiwi’.
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