Pound (GBP) softens amid UK cost-of-living worries
The pound (GBP) weakened yesterday after the Confederation of British Industry’s (CBI) distributive trades survey printed significantly below expectations.
GBP also faced pressure from concerns surrounding the rising cost of living in the UK, as higher energy bills could weigh on household spending and hinder the wider British economy.
Market-moving UK data is limited today. As a result, Sterling could trade without a clear sense of direction.
Euro (EUR) mixed despite hawkish ECB comments
The euro (EUR) traded unevenly yesterday, advancing against its weaker counterparts while retreating against stronger currencies.
EUR drew some support from comments made by European Central Bank (ECB) policymaker Isabel Schnabel, who suggested that the bank may need to continue raising interest rates.
Attention now turns to the release of the ECB’s July meeting minutes later today. If the minutes echo Schnabel’s view that further rate rises are necessary, the euro may strengthen.
US dollar (USD) supported by persistent inflation
The US dollar (USD) surged yesterday following the release of the latest US core PCE price index.
The Federal Reserve’s preferred inflation measure revealed that price growth remained considerably above the central bank’s target in July, prompting increased speculation that an interest rate hike could be delivered this year.
Looking ahead, the US dollar may trade cautiously today as investors await Fed Chair Kevin Warsh’s keynote address at the Jackson Hole symposium, along with the annual revision to US non-farm payrolls. Both are scheduled for release tomorrow.
Canadian dollar (CAD) pressured by persistent trade concerns
The Canadian dollar (CAD) weakened against its stronger peers yesterday as CAD investors remained wary of the potential consequences of a trade war with the US.
The ‘loonie’ may continue to face pressure today should trade tensions remain a key concern. Developments in oil prices could also affect the crude-linked Canadian dollar.
Australian dollar (AUD) continues to draw support from RBA bets
The Australian dollar (AUD) edged higher overnight as an improving market mood, alongside bets on an interest rate hike from the Reserve Bank of Australia (RBA), supported the ‘Aussie’.
New Zealand dollar (NZD) gives up risk-driven gains
The New Zealand dollar (NZD) initially edged higher during the Asian trading session as market sentiment improved, before subsequently surrendering its gains.
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