Pound (GBP) supported by BoE rate hike bets
The pound (GBP) remained supported yesterday as expectations grew around a potential Bank of England (BoE) interest rate hike next month, while the prospect of closer UK-EU ties also lent Sterling some support.
However, with no fresh UK data to drive the currency, the pound’s gains were limited.
The UK economic calendar remains light today, which could leave the pound trading without a clear directional bias.
Euro (EUR) steadies as debt concerns fade
The euro (EUR) edged higher yesterday as the recent selloff lost momentum, with calmer conditions in French bond markets easing concerns over a potential debt crisis in the Eurozone’s second-largest economy.
The euro was also supported by its strong inverse relationship with the weakening US dollar (USD), allowing the single currency to shrug off a sharp 10% decline in German factory orders in August.
Today, however, even a stronger-than-expected rebound in German industrial production is failing to lift the single currency, as renewed USD strength and higher French bond yields weigh on EUR.
US dollar (USD) falls as risk appetite improves
The US dollar weakened yesterday as a brighter market mood reduced demand for the safe-haven ‘greenback’.
Improved risk appetite followed a decline in oil prices, while reduced expectations of a Federal Reserve interest rate hike this month also helped sentiment and put pressure on USD.
Looking ahead to today, USD is ticking higher amid a more cautious market mood ahead of the Fed meeting minutes this evening. Should the minutes reveal a broadly hawkish stance among policymakers, the US dollar could find further support.
Canadian dollar (CAD) slips as oil prices fall
The commodity-linked Canadian dollar (CAD) fell yesterday as oil prices moved lower, with increased Middle East exports and a G7 announcement on strategic reserves helping to alleviate concerns over supply.
With little domestic data due today, movements in crude prices could remain the key driver for the Canadian dollar, leaving CAD exposed to further losses should oil prices decline again.
Australian dollar (AUD) directionless amid mixed sentiment
The Australian dollar (AUD) was broadly rangebound overnight as mixed market sentiment left the ‘Aussie’ without a clear direction.
New Zealand dollar (NZD) weakens amid data drought
The New Zealand dollar (NZD) softened overnight, with a lack of economic data and subdued risk appetite leaving NZD struggling to find support.
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