Pound (GBP) holds firm despite weak PMIs
The pound (GBP) traded unevenly yesterday, although it displayed notable resilience in the wake of disappointing PMI releases.
While the latest figures signalled a surprise contraction in the UK’s key services sector, Sterling still managed to strengthen against its weaker peers and avoid significant losses elsewhere.
Looking ahead, UK political developments may draw GBP investor attention today. Uncertainty over whether the government’s policy approach could shift once Prime Minister Keir Starmer is replaced may weigh on the pound.
Euro (EUR) undermined by shrinking Eurozone activity
The euro (EUR) softened yesterday after the latest Eurozone PMI surveys showed private sector activity contracted for a third consecutive month in June.
EUR also came under pressure from its strong negative correlation with the US dollar (USD), as the latter currency strengthened. However, the relatively safe single currency held up well against its riskier peers.
Today, the euro may find support if Germany’s latest IFO business climate index points to an improvement in morale this month.
US dollar (USD) jumps amid safe-haven flows
The US dollar surged yesterday, hitting multi-month highs against some of its counterparts, as a sharply risk-averse market mood pushed investors towards the safety of the ‘greenback’.
Stronger-than-expected US PMI data also boosted USD demand, with activity in both the manufacturing and services sectors accelerating in June.
US economic data is thin on the ground on Wednesday, which could leave the ‘greenback’ to trade in line with market risk appetite. If sentiment improves, the US dollar may come under pressure.
Canadian dollar (CAD) supported despite weaker oil prices
The Canadian dollar (CAD) edged higher yesterday, with the crude-linked currency shrugging off softer oil prices and benefiting from its positive correlation with the US dollar.
Looking ahead, Bank of Canada (BoC) Senior Deputy Governor Carolyn Rogers is scheduled to speak. Any hawkish comments following Monday’s hotter-than-forecast inflation figures could support the ‘loonie’.
Australian dollar (AUD) slides as inflation cools
The Australian dollar (AUD) remained under pressure last night, following sharp losses yesterday, after Australian inflation unexpectedly eased in May.
New Zealand dollar (NZD) falls amid nervous trade
The New Zealand dollar (NZD) struck multi-month lows overnight, as a risk-off mood continued to dominate markets.
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