Pound (GBP) trades unevenly amid continued data shortage
The pound (GBP) struggled to establish a clear trend yesterday as the UK’s economic calendar remained relatively quiet.
With little domestic data to drive direction, Sterling moved within a broad range and remained vulnerable to shifts in wider market conditions.
The pound could continue to trade without a clear bias today as the UK’s recent data drought persists, potentially leaving GBP investors reluctant to take significant positions ahead of tomorrow’s GDP figures.
Euro (EUR) gains as USD weakens
The euro (EUR) edged higher yesterday, with the single currency seemingly benefiting from its strong inverse relationship with the softer US dollar (USD).
However, the upcoming European Central Bank (ECB) interest rate decision – due to be announced today – kept the euro’s gains in check.
With a 25-basis-point rate hike already fully priced in, EUR investors will instead be watching the ECB’s forward guidance. Markets are anticipating a hawkish stance, meaning the euro could come under pressure if the central bank adopts a more dovish tone than expected.
US dollar (USD) subdued despite risk-off conditions
The US dollar was subdued yesterday, with a risk-off market mood providing USD with limited safe-haven demand.
A combination of broader economic and technical influences contributed to the downside, including the US-Iran war, ongoing trade tensions with Canada and the strength of the Japanese yen (JPY).
Attention now turns to the latest US producer price index, due for release today. If producer prices increased in August, this could lend some support to the USD, although any gains may remain constrained ahead of tomorrow’s more significant inflation figures.
Canadian dollar (CAD) falls as trade tensions intensify
The crude-linked Canadian dollar (CAD) weakened yesterday even as oil prices climbed, as the US intensified its trade dispute with Canada by imposing a ban on certain Canadian goods.
Commodity prices and the ongoing trade tensions could remain key drivers of CAD exchange rates today. Although elevated crude prices may provide some support for the ‘loonie’, the worsening trade conflict could weigh on the currency.
Australian dollar (AUD) subdued by weaker inflation expectations
The Australian dollar (AUD) was little changed overnight after Australia’s latest consumer inflation expectations figures came in below forecasts.
New Zealand dollar (NZD) edges higher despite quiet calendar
The New Zealand dollar (NZD) saw some dip-buying overnight, allowing it to recover slightly from yesterday’s one-week lows.
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