Pound (GBP) subdued amid dearth of catalysts
The pound (GBP) traded without a clear direction on Friday as a continued lack of UK economic releases left Sterling lacking impetus.
The currency then remained rangebound at the start of this week as the UK bank holiday contributed to subdued trading conditions.
The UK’s finalised manufacturing PMI for August is due this morning, although unless the figures differ significantly from the preliminary estimate, the release may have little bearing on GBP exchange rates.
Euro (EUR) pressured by USD strength
The euro (EUR) struggled on Friday as its strong inverse relationship with the US dollar (USD) outweighed a stronger-than-anticipated improvement in Eurozone economic sentiment last month.
EUR exchange rates subsequently edged higher at the start of this week, supported by firmer expectations for further European Central Bank (ECB) rate hikes.
The Eurozone’s consumer price index takes centre stage today, with an anticipated pickup in inflation potentially providing a boost to the single currency.
US dollar (USD) rallies as Warsh revives September hike bets
The US dollar ended last week on a stronger footing as investors responded to comments from Federal Reserve Chair Kevin Warsh during his Jackson Hole address.
Warsh indicated that the bank still has ‘more work to do’ to bring inflation under control, reviving expectations for a September Fed hike, although surging Treasury yields subsequently eroded some of these gains on Monday.
USD investors will focus on the latest US employment data today, with another decline in job openings potentially fuelling concerns over a cooling labour market.
Canadian dollar (CAD) lifted by stronger GDP
A sharp pickup in domestic GDP growth during the second quarter provided a boost to the Canadian dollar (CAD) at the end of last week, although persistent trade uncertainty prevented the ‘loonie’ from holding onto these gains.
Looking ahead, the ‘loonie’ could come under renewed selling pressure today as concerns surrounding the US-Canada trade dispute persist.
Australian dollar (AUD) supported by stronger Chinese factory activity
The Australian dollar (AUD) attracted modest support overnight on Monday after China’s latest manufacturing PMI exceeded expectations.
New Zealand dollar (NZD) rangebound ahead of RBNZ decision
The New Zealand dollar (NZD) traded sideways overnight as NZD investors adopted a cautious stance ahead of Wednesday’s Reserve Bank of New Zealand (RBNZ) interest rate decision.
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