Pound (GBP) directionless amid absence of data
The pound (GBP) wavered without a clear direction yesterday as a lack of impactful UK data exposed the currency to volatility.
This also left the increasingly risk-sensitive pound to be influenced by market risk appetite, with GBP gaining ground against safer currencies as sentiment improved but falling against riskier rivals.
With market-moving UK economic data still thin on the ground today, Sterling could trade without a clear trajectory.
Euro (EUR) weakens following dire German data
The euro (EUR) fell yesterday after German industrial production plunged 4.3% in August, compared to forecasts for a 1% decline.
While Germany's statistics office attributed the results partly to seasonal factors, the data still raised concerns about the structural challenges facing the industry in the Eurozone's largest economy.
The focus for EUR investors today will be the European Central Bank's (ECB) policy meeting minutes. Evidence that the ECB is done with interest rate cuts could support the euro.
US dollar (USD) pressured by dovish Fed minutes
The US dollar (USD) traded in a wide range during yesterday's European session amid a fluctuating market mood, with the safe-haven currency bouncing back from its initial losses as the mood soured.
USD then came under fresh pressure in the evening, following the release of the Federal Reserve's meeting minutes, which highlighted policymakers' willingness to continue cutting interest rates through the remainder of 2025.
Fed Chair Jerome Powell is due to speak later today. If he reiterates that the central bank will take a careful approach to future rate cuts, USD could climb.
Canadian dollar (CAD) trades true to USD correlation
The Canadian dollar (CAD) traded broadly in tandem with the US dollar yesterday, due to CAD's positive correlation with USD.
Looking ahead, oil price movements could impact the crude-linked 'loonie' today. The Canadian dollar may track any shifts in oil.
Australian dollar (AUD) rallies amid USD pullback
The Australian dollar (AUD) strengthened in overnight trade as the dovish Fed minutes and subsequent pullback in the US dollar helped to boost market risk appetite.
New Zealand dollar (NZD) recovery capped by RBNZ rate cut speculation
A risk-positive market mood also underpinned the New Zealand dollar (NZD) during today's Asian trading session, although these gains remained limited as markets continued to digest the Reserve Bank of New Zealand's (RBNZ) larger-than-expected rate cut on Wednesday.
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