Pound (GBP) struggles to recover from inflation setback
The pound (GBP) remained under pressure yesterday, with Sterling sentiment still dampened by Wednesday’s disappointing inflation figures.
With price growth now appearing to have peaked below the Bank of England’s (BoE) forecasts, speculation is mounting that the BoE could lower interest rates before the end of the year.
UK retail sales exceeded expectations this morning. Should the upcoming PMI data also surprise to the upside, it may prompt traders to scale back rate cut bets and help Sterling end the week on firmer footing.
Euro (EUR) gains on stronger consumer confidence
The euro (EUR) initially dipped on Thursday but regained ground following the release of the Eurozone’s latest consumer confidence figures.
October’s preliminary data showed sentiment improving to its highest level since February.
Attention now turns to the Eurozone’s PMI readings, which could limit further euro strength if they reveal a slowdown in private sector activity this month.
US dollar (USD) steady ahead of key inflation data
The US dollar (USD) traded in a narrow range on Thursday, as investors remain cautious ahead of Friday’s key US CPI release.
As one of the few federal data releases unaffected by the ongoing government shutdown, September’s inflation report is likely to carry extra weight for markets.
If inflation comes in hot, it could dampen expectations for Federal Reserve rate cuts and boost the US dollar. However, a weaker print may see the ‘greenback’ tumble.
Canadian dollar (CAD) flat despite rising oil prices
The Canadian dollar (CAD) struggled for direction on Thursday, as a disappointing retail sales report offset the boost from stronger oil prices.
Adding to the headwinds for the ‘loonie’, former US President Donald Trump announced this morning he is ending trade negotiations with Canada after an advert critical of his tariff plans.
Australian dollar (AUD) wavers after uneven PMI results
The Australian dollar (AUD) was subdued in overnight trade as PMI data painted a mixed picture, showing faster expansion in services but a surprise downturn in manufacturing.
New Zealand dollar (NZD) edges lower amid risk aversion
The New Zealand dollar (NZD) weakened during Asian trading as a cautious market mood curbed demand for the risk-sensitive ‘kiwi’.
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