Pound (GBP) edges up after UK inflation accelerates
The pound (GBP) found support yesterday after UK inflation rose more sharply than anticipated, strengthening expectations that the Bank of England (BoE) may tighten monetary policy.
However, Sterling’s advance was tempered by concerns over the UK’s public finances, as fresh figures revealed that government borrowing exceeded expectations in September, ahead of next week’s Autumn Budget.
Two economic releases from the Confederation of British Industry (CBI) could weigh on GBP today if they meet forecasts. Conversely, Sterling may find support if BoE Governor Andrew Bailey adopts a hawkish stance in a speech scheduled for later in the session.
Euro (EUR) weakens as French bond yields reach 24-year peak
The euro (EUR) remained under pressure yesterday as continued social unrest across Europe and mounting concerns over French government debt weighed on the single currency.
France’s 10-year government bond yield briefly climbed to 5%, reaching its highest level since 2002 and intensifying fears of a fiscal crisis in the Eurozone’s second-largest economy.
Looking ahead, Eurozone consumer confidence is expected to deteriorate in October, potentially placing the euro under further pressure today.
US dollar (USD) eases as market sentiment improves
The US dollar (USD) struggled to gain traction yesterday, with improving market sentiment prompting the safe-haven currency to lose ground against its stronger peers.
Nevertheless, overall movements remained limited, as the improvement in risk appetite was relatively modest.
Today’s latest US initial jobless claims figures could influence the ‘greenback’, although the impact may be limited. More broadly, shifts in market risk appetite could prove an important driver for the safe-haven US dollar.
Canadian dollar (CAD) weighed down by falling oil prices
The commodity-linked Canadian dollar (CAD) traded unevenly yesterday, losing ground against some of its counterparts as oil prices moved lower.
Crude price movements could continue to dictate the Canadian dollar’s performance today, with a sharp increase in oil prices potentially lifting the ‘loonie’.
Australian dollar (AUD) retreats as risk sentiment deteriorates
The Australian dollar (AUD) moved lower overnight as a deterioration in market sentiment reduced demand for the risk-sensitive currency.
New Zealand dollar (NZD) slips as inflation eases
The New Zealand dollar (NZD) experienced a volatile overnight session before ultimately weakening, following a larger-than-expected slowdown in New Zealand’s inflation rate in the third quarter. The softer figures dampened expectations that the Reserve Bank of New Zealand (RBNZ) will raise interest rates next week.
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