Pound (GBP) weighed down by budget concerns
The pound (GBP) found it difficult to advance on Tuesday, with traders staying guarded ahead of next week’s pivotal autumn budget.
Apprehension is building that Chancellor Rachel Reeves’s fiscal plans may land poorly with markets, while added complexity to the tax system could further hinder the UK’s economic momentum.
Fresh CPI figures revealed that UK inflation eased to 3.6% last month. Although the slowdown will be welcomed by the government, the pound looks vulnerable as the data reinforces expectations for a Bank of England (BoE) rate cut in December.
Euro (EUR) drifts in absence of market-moving data
The euro (EUR) struggled to establish a clear trajectory on Tuesday, with a sparse Eurozone data calendar leaving the currency largely directionless.
Some mild support emerged later in the session as a softer US dollar (USD) offered the euro a foothold, though the resulting uptick remained minimal.
The Eurozone’s own CPI release is due today. Should October’s finalised inflation readings align with earlier estimates, market reaction may be subdued, but any surprises could prompt movement in EUR exchange rates.
US dollar (USD) pressured by soft labour figures
The US dollar strengthened early in Tuesday’s session, as concern over a correction in AI-linked stocks boosted demand for haven assets.
But the ‘greenback’ later surrendered these gains following disappointing US employment data, which reignited worries about the underlying health of the jobs market.
Later today, the Federal Reserve will release the minutes of its most recent policy meeting. A firmer, more hawkish stance from policymakers could help lift USD sentiment.
Canadian dollar (CAD) supported as Carney pushes budget through
The Canadian dollar (CAD) moved broadly higher on Tuesday after investors reacted positively to news that Prime Minister Mark Carney had successfully passed his first federal budget.
Shifts in crude oil prices are likely to influence the ‘loonie’ through today’s session, with further weakness in oil expected to drag on CAD demand.
Australian dollar (AUD) softens amid equity market volatility
The Australian dollar (AUD) slipped overnight on Tuesday as persistent turbulence in global stock markets weighed on appetite for risk-sensitive assets like the ‘Aussie’.
New Zealand dollar (NZD) weakens on heightened RBNZ easing expectations
The New Zealand dollar (NZD) also faltered during the overnight session, with a fresh slowdown in producer input costs fuelling speculation that the Reserve Bank of New Zealand (RBNZ) will continue cutting interest rates.
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