Pound (GBP) struggles on downbeat UK outlook
The pound (GBP) softened yesterday as the absence of fresh UK economic data left investors to dwell on gloomy domestic reports.
Headlines highlighting a tough environment for British businesses – including weak job creation and shelved investment plans – dragged Sterling lower.
Today’s Confederation of British Industry (CBI) distributive trades survey could offer GBP some respite if it shows activity improved in September.
Euro (EUR) weakens after poor German data
The euro (EUR) lost ground on Wednesday as Germany’s business climate index unexpectedly slumped to a four-month low.
Adding to the pressure, heightened tensions between NATO and Russia unsettled EUR traders, after Moscow insisted it has ‘no alternative’ but to continue its offensive in Ukraine following the latest escalation.
Looking ahead, the euro may gain some support this morning after Germany’s consumer confidence index beat forecasts heading into October. However, ongoing geopolitical concerns could limit the single currency’s upside.
US dollar (USD) firms on Fed signals and safe-haven demand
The US dollar (USD) pushed higher yesterday after Federal Reserve officials struck a cautious tone. Fed Chair Jerome Powell warned inflation could remain sticky, dampening expectations for aggressive interest rate cuts.
The safe-haven ‘greenback’ also attracted support as global sentiment soured amid Russia-NATO tensions.
Turning to today, mixed US releases could drive volatility. A likely contraction in durable goods orders and an uptick in jobless claims may weigh on USD, though confirmation of robust second-quarter GDP growth could provide fresh strength.
Canadian dollar (CAD) supported by rising oil prices
The commodity-linked Canadian dollar (CAD) advanced yesterday, with gains underpinned by another increase in crude oil prices.
Today, Canada’s wage figures may influence CAD. Signs of easing wage growth could drag on the ‘loonie’ by fuelling bets on Bank of Canada (BoC) interest rate cuts.
Australian dollar (AUD) lifted by risk recovery
The Australian dollar (AUD) strengthened overnight as improved market sentiment boosted demand for the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) edges higher on upbeat tone
Similarly, the New Zealand dollar (NZD) climbed overnight as investors’ risk appetite improved.
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