Pound (GBP) weighed down by 19-year high in bond yields
The pound (GBP) came under pressure yesterday as the cost of UK government borrowing continued to rise, with 10-year gilt yields reaching their highest point since August 2007.
Although yields subsequently retreated from their 19-year peak, Sterling continued to struggle to gain traction.
The UK’s final services PMI for August could lend the pound some support today if it confirms that activity across the crucial sector picked up pace last month.
Euro (EUR) directionless amid quiet data calendar
The euro (EUR) lacked a clear direction yesterday in the absence of significant Eurozone economic data.
As a result, the common currency experienced mixed performance against its counterparts, particularly as wider market volatility continued to influence trading.
An anticipated acceleration in Eurozone producer price inflation in July may offer EUR some support today if markets interpret the data as further evidence of mounting inflationary pressures across the bloc.
US dollar (USD) retreats as risk appetite returns
The safe-haven US dollar (USD) lost ground yesterday afternoon as improving market sentiment reduced demand for the currency.
The latest ADP employment change data also weighed on the ‘greenback’, with the US economy adding only 38,000 jobs in August, marking its weakest increase since January.
Later today, the US dollar could find support if the latest ISM services PMI points to a modest improvement in activity during August.
Canadian dollar (CAD) recovers as BoC highlights inflation risks
The Canadian dollar (CAD) was initially undermined by falling oil prices yesterday, given its close relationship with crude. However, CAD subsequently recovered after the Bank of Canada (BoC) highlighted greater upside risks to inflation as it announced its interest rate decision.
Canada’s latest services PMI could put pressure on the ‘loonie’ today if it shows that activity contracted for a second consecutive month in August. Meanwhile, movements in oil prices could also influence CAD.
Australian dollar (AUD) weakened by disappointing trade data
The Australian dollar (AUD) declined overnight despite a risk-on mood across markets, as disappointing Australian trade data weighed on the currency.
New Zealand dollar (NZD) gains as risk appetite improves
The New Zealand dollar (NZD) clawed back some of yesterday’s losses overnight, with increased risk appetite providing support for the ‘kiwi’.
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