Pound (GBP) wavers as bond yields rise
The pound (GBP) made some headway yesterday, with the recent increase in oil prices reviving expectations that the Bank of England (BoE) could raise interest rates this year.
However, Sterling gave up ground in the afternoon as concerns over higher government borrowing costs weighed on the currency, with bond yields climbing to their highest levels since 2008.
With few UK data releases on the calendar today, the pound may struggle to establish a clear direction.
Euro (EUR) steadies amid higher inflation
The euro (EUR) was initially subdued yesterday, with the common currency struggling against its stronger peers amid its negative correlation with the strengthening US dollar (USD).
However, the Eurozone’s latest consumer price index helped EUR recover ground in the afternoon. Headline inflation accelerated as expected in August, climbing from 2.9% to 3.3%.
Looking ahead, EUR could remain muted today as a lack of economic data from the Eurozone limits potential movement.
US dollar (USD) strengthens in risk-averse trade
The US dollar advanced yesterday, with expectations of Federal Reserve interest rate hikes and a risk-off mood providing support for the currency.
However, USD pared its gains in the afternoon after the latest ISM manufacturing PMI for the US came in below forecasts.
Looking to today, the latest US factory orders data could influence the ‘greenback’. A forecast recovery in July could provide a boost to USD.
Canadian dollar (CAD) weakened by trade war concerns
The crude-linked Canadian dollar (CAD) was mixed yesterday despite higher oil prices, with the currency losing ground against its stronger rivals amid ongoing US-Canada trade tensions.
The Bank of Canada (BoC) is set to announce its latest interest rate decision today. However, with no change to policy expected, trade developments and oil price movements could steer the Canadian dollar.
Australian dollar (AUD) fluctuates despite stronger GDP
The Australian dollar (AUD) fluctuated overnight. While stronger-than-expected GDP figures provided support for AUD, a risk-off mood limited the currency’s upside potential.
New Zealand dollar (NZD) tumbles despite RBNZ rate hike
The New Zealand dollar (NZD) plunged last night following the Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision. While the bank raised rates, it adopted a slightly dovish tone regarding the need for further hikes.
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