Pound (GBP) subdued amid lack of UK data
The pound (GBP) traded quietly yesterday, slipping against its stronger peers while moving sideways elsewhere, as a lack of fresh UK economic data left Sterling without clear direction.
UK political uncertainty also kept the pound in check. Although investors appear reassured that the Labour Party may have avoided a prolonged leadership contest, questions remain over the government’s future policy direction.
Looking ahead, the Confederation of British Industry’s (CBI) latest distributive trades survey may have only a limited impact on GBP today. Instead, investors are likely to keep a close eye on domestic political developments.
Euro (EUR) struggles as USD strength weighs
The euro (EUR) initially weakened yesterday, pressured by its strong negative correlation with a rising US dollar (USD).
However, the single currency managed to avoid sharper losses and later recovered against some rivals. This was partly supported by an improvement in German business morale in June.
Turning to today, Germany’s latest consumer confidence index missed forecasts, showing a much weaker-than-expected improvement in morale. This could weigh on EUR this morning.
US dollar (USD) extends rally amid risk-off trade
The US dollar continued its recent winning streak yesterday, with the US dollar index climbing to its highest level in over a year as a downbeat market mood supported demand for the safe-haven currency.
Persistent concerns over a possible AI bubble, alongside expectations that the Federal Reserve will raise interest rates, prompted investors to avoid riskier assets and favour the ‘greenback’.
Today, attention turns to the latest US core PCE price index, the Fed’s preferred inflation measure. If price pressures accelerated in May, renewed rate hike bets could provide further support for USD.
Canadian dollar (CAD) lifted by US dollar strength
The Canadian dollar (CAD) ticked higher against some peers yesterday, supported by its positive correlation with the US dollar. However, weaker oil prices capped gains for the crude-linked ‘loonie’.
With no major Canadian data due today, CAD may be left to trade in line with oil price movements. Continued weakness in crude could put pressure on the Canadian dollar.
Australian dollar (AUD) rangebound despite strong jobs data
The Australian dollar (AUD) traded within a narrow range overnight. Although upbeat Australian employment figures offered some support, a cautious market mood prevented the risk-sensitive ‘Aussie’ from making meaningful gains.
New Zealand dollar (NZD) holds near multi-month lows
The New Zealand dollar (NZD) remained subdued overnight, with a lack of domestic data and a muted market mood leaving the currency trading close to recent multi-month lows.
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