Pound (GBP) dips amid fiscal concerns
The pound (GBP) lost ground yesterday as elevated UK government bond yields reignited concerns over the country’s fiscal sustainability.
At the same time, the increasingly risk-sensitive pound struggled amid the prevailing risk-off sentiment sweeping global markets.
Looking ahead, remarks from Bank of England (BoE) Chief Economist Huw Pill later today could influence GBP movement. Should he indicate that further interest rate cuts are unlikely in 2025, Sterling may rebound.
Euro (EUR) subdued amid ongoing French political turmoil
The euro (EUR) remained under pressure yesterday as political instability in France continued to unsettle investors.
Following the unexpected resignation of Prime Minister Sébastien Lecornu on Monday, the far-right National Rally – the largest party in the French parliament – refused to take part in discussions aimed at resolving the crisis.
The single currency began today on a weaker footing after German industrial production plunged by 4.3% in August. Later, comments from European Central Bank (ECB) President Christine Lagarde could lend EUR some support if she suggests interest rates are neutral.
US dollar (USD) advances on safe-haven demand
The US dollar (USD) firmed yesterday as investors sought refuge in the safe-haven currency.
The ‘greenback’ drew strength from risk-averse trade, spurred by concerns over a new 25% US tariff on imported trucks and heightened political uncertainty in Europe and Japan.
Attention now turns to the publication of the Federal Reserve’s September meeting minutes later today. If the minutes reveal hesitation among policymakers regarding further rate cuts, USD could extend its gains.
Canadian dollar (CAD) edges higher despite soft trade data
The Canadian dollar (CAD) advanced yesterday, managing to shrug off disappointing trade figures. The ‘loonie’ found support from its positive correlation with the strengthening US dollar and optimism surrounding talks between Canadian Prime Minister Mark Carney and US President Donald Trump.
In the absence of domestic data today, CAD may track oil price movements. Rising crude prices could provide the commodity-linked currency with additional tailwinds.
Australian dollar (AUD) slips amid risk-off sentiment
The Australian dollar (AUD) weakened overnight as a cautious market mood dampened demand for risk-sensitive assets.
New Zealand dollar (NZD) plunges as RBNZ delivers half-point rate cut
The New Zealand dollar (NZD) tumbled overnight after the Reserve Bank of New Zealand (RBNZ) announced a steep 50bps rate cut and signalled that further monetary easing could follow.
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