Pound (GBP) slips as quiet calendar offers little support
The pound (GBP) lost ground against its stronger counterparts yesterday, with a lack of economic releases leaving Sterling short of fresh support.
Without any positive domestic catalysts, the currency struggled to sustain its recent momentum and was vulnerable to losses.
Looking ahead, the UK economic calendar remains sparse today, potentially leaving Sterling prone to further volatility.
Euro (EUR) gains capped by stronger US dollar
The euro (EUR) advanced against several major peers yesterday, as easing French bond yields helped alleviate concerns over the fiscal outlook in the Eurozone’s second-largest economy.
However, the single currency’s strong negative correlation with the strengthening US dollar (USD) restricted its progress during the afternoon. A renewed rise in French borrowing costs also limited EUR’s upside.
Turning to today, European Central Bank (ECB) President Christine Lagarde is scheduled to speak later this morning. A cautious message from the central bank chief could put pressure on the euro.
US dollar (USD) rallies after inflation exceeds expectations
The US dollar recovered yesterday, with stronger-than-forecast inflation data fuelling expectations of further Federal Reserve interest rate increases.
Both headline and core inflation rose by more than anticipated on a monthly basis in October. In the wake of the figures, the implied probability of a 25-basis-point rate hike in December climbed to 90%, while the likelihood of a larger 50-basis-point increase reached 10%.
With little in the way of US economic data on the calendar today, broader risk sentiment could dictate USD’s direction. Could improving risk appetite prompt the safe-haven currency to give back some of its recent gains?
Canadian dollar (CAD) supported by stronger US dollar
The oil-sensitive Canadian dollar (CAD) weakened yesterday as crude prices extended their decline. However, its positive correlation with the US dollar helped the currency recover some ground later in the session.
Oil market movements are likely to remain an important influence on CAD today. Further falls in crude prices could leave the Canadian dollar facing additional pressure.
Australian dollar (AUD) rebounds as risk appetite improves
The Australian dollar (AUD) clawed back some ground overnight, with a brighter market mood providing support for the risk-sensitive currency.
New Zealand dollar (NZD) edges higher as risk sentiment improves
The New Zealand dollar (NZD) also made modest gains during Wednesday’s Asian trading session, as improving risk appetite lent support to the currency.
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