Pound (GBP) slips amid renewed budget fears
The pound (GBP) weakened yesterday as investors grew increasingly anxious about Chancellor Rachel Reeves’s upcoming autumn budget.
This came after the Institute for Fiscal Studies cautioned that Reeves could inflict ‘unnecessary economic damage’ if she prioritises the political presentation of her budget over sound fiscal policy.
Sterling is under additional strain this morning after the UK’s latest employment figures missed forecasts, fuelling expectations the Bank of England (BoE) may lower interest rates again before the end of the year.
Euro (EUR) struggles amid doubts over French leadership
The euro (EUR) found itself under pressure on Monday following President Emmanuel Macron’s reappointment of Sébastien Lecornu as Prime Minister, a move that did little to reassure markets.
While the decision spared France from snap parliamentary elections, investors remain doubtful that Lecornu’s renewed mandate will bring lasting stability to the government.
The release of Germany’s latest ZEW sentiment index may help steady the euro today if it shows further improvement in investor confidence across the bloc’s largest economy.
US dollar (USD) volatile amid mixed US-China signals
Despite US markets being closed for Columbus Day on Monday, the US dollar (USD) saw continued turbulence as traders reacted to fresh uncertainty surrounding US-China trade policy.
In a post on social media, President Donald Trump appeared to temper his earlier threats of imposing 100% tariffs on Chinese imports, adding confusion to the outlook for bilateral trade.
As markets reopen today, attention will turn to a speech from Federal Reserve Chair Jerome Powell. Any suggestion of a more hawkish stance could bolster the dollar by dampening rate cut expectations.
Canadian dollar (CAD) strengthened by firming oil prices
The Canadian dollar (CAD) advanced on Monday, drawing strength from a recovery in oil prices, which supported demand for the commodity-linked currency.
CAD movement is likely to remain closely tied to oil price trends today. Should crude continue its upward momentum, the ‘loonie’ could extend its recent gains.
Australian dollar (AUD) dips after cautious RBA minutes
The Australian dollar (AUD) edged lower overnight on Monday, following the release of the Reserve Bank of Australia’s (RBA) September meeting minutes, in which policymakers signalled that monetary policy remains restrictive, hinting at potential rate cuts in the future.
New Zealand dollar (NZD) retreats amid easing RBNZ outlook
The New Zealand dollar (NZD) also slipped in overnight trade, weighed down by a subdued risk environment and mounting speculation that the Reserve Bank of New Zealand (RBNZ) will cut interest rates again soon.
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