Pound (GBP) underpinned by BoE bets
The pound (GBP) continued to attract support yesterday amid bets on a Bank of England (BoE) interest rate hike next month and the possibility of closer ties between the UK and the EU.
However, a lack of fresh UK data meant Sterling’s upside potential was limited.
British economic data remains thin on the ground today, potentially leaving the pound to trade without a clear directional bias.
Euro (EUR) stabilises as debt fears ease
The euro (EUR) crawled up yesterday following its recent selloff as calm returned to French bond markets, easing fears about a debt crisis in the Eurozone’s second-largest economy.
Additionally, EUR’s strong negative correlation with the weakening US dollar (USD) supported the euro, helping the single currency brush off a startling 10% slump in German factory orders in August.
Today, a larger-than-forecast recovery in German industrial production is unable to support the single currency as fresh strength in USD and rising French bond yields dent EUR.
US dollar (USD) slides as sentiment improves
The US dollar fell yesterday as an improving market mood weighed on the safe-haven ‘greenback’.
Risk appetite improved as oil prices eased, while fading bets on a Federal Reserve interest rate hike this month also cheered markets and weighed on USD.
Turning to today, USD is edging up amid a cautious mood ahead of the Fed meeting minutes this evening. If the minutes point to a broadly hawkish tone among investors, the US dollar could regain further ground.
Canadian dollar (CAD) drops as oil prices decline
The commodity-sensitive Canadian dollar (CAD) fell yesterday as oil prices declined, with rising Middle East exports and a G7 release of strategic reserves helping to ease supply concerns.
Crude prices could continue to drive the Canadian dollar today amid a lack of domestic data, with CAD vulnerable to losses if oil slips again.
Australian dollar (AUD) unsure amid mixed mood
The Australian dollar (AUD) traded broadly sideways overnight as a mixed market mood left the ‘Aussie’ lacking a clear direction.
New Zealand dollar (NZD) stumbles in absence of data
The New Zealand dollar (NZD) softened overnight, with NZD struggling to attract support amid a lack of data and a muted appetite for risk.
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