Pound (GBP) directionless as UK data remains limited
The pound (GBP) lacked a clear sense of direction yesterday as a sparse UK data calendar left the currency without much domestic impetus, although it managed to make modest gains against some of its weaker counterparts.
Comments from Bank of England (BoE) policymakers also failed to give the pound a decisive push in either direction, with officials presenting differing views when questioned by Parliament’s Treasury committee.
The UK economic calendar remains relatively quiet today, which could leave the pound subdued. Instead, movement could stem from developments in the bond market and UK domestic headlines.
Euro (EUR) subdued despite German trade surplus
The euro (EUR) remained muted yesterday, with EUR investors appearing largely unmoved by the latest German trade figures.
Germany’s trade surplus increased to €21.3bn in July – its widest since August 2024 – although the expansion came as imports declined more sharply than exports.
The euro may continue to see limited movement today, with EUR investors likely to remain cautious ahead of tomorrow’s European Central Bank (ECB) interest rate decision.
US dollar (USD) pares gains despite risk aversion
The US dollar (USD) initially strengthened yesterday as a deteriorating market mood increased demand for the safe-haven ‘greenback’.
However, the currency was unable to hold on to its earlier gains and pared its advance during the afternoon, with US-Canada trade tensions and a modest reduction in Federal Reserve interest rate hike bets weighing on the USD.
With no major US economic data due today, broader risk sentiment could remain the key driver for the USD. Should the market mood stay subdued, demand for the safe-haven ‘greenback’ could increase.
Canadian dollar (CAD) strengthened as oil prices climb
The oil-sensitive Canadian dollar (CAD) advanced yesterday as Brent crude – the global oil benchmark – pushed above $99 per barrel, reaching its highest point since late July.
Crude prices are rising again today following a further escalation in the US-Iran war. Continued strength in oil prices could provide support for the ‘loonie’ during today’s session.
Australian dollar (AUD) supported by stronger Chinese inflation
The Australian dollar (AUD) strengthened overnight after fresh figures showed Chinese inflation increased in August, helping to ease concerns over deflationary pressures in Australia’s largest trading partner.
New Zealand dollar (NZD) holds steady amid mixed sentiment
The New Zealand dollar (NZD) moved sideways overnight, with an uneven market mood leaving the risk-sensitive currency without a clear catalyst.
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