Pound (GBP) unsure as bond yields climb
The pound (GBP) had some success yesterday, as the recent rise in oil prices revived bets that the Bank of England (BoE) will hike interest rates this year.
However, Sterling retreated in the afternoon amid concerns about rising government borrowing costs, as bond yields rose to their highest levels since 2008.
With British data releases thin on the ground today, Sterling could struggle to find a clear direction.
Euro (EUR) finds footing amid rising inflation
The euro (EUR) was initially subdued yesterday, with the common currency struggling against its stronger peers due to its negative correlation with the rising US dollar (USD).
The Eurozone’s latest consumer price index then helped EUR regain ground in the afternoon. Headline inflation accelerated as expected in August, rising from 2.9% to 3.3%.
Looking forward, EUR may be muted today amid a lack of economic data from the Eurozone.
US dollar (USD) firms in risk-averse trade
The US dollar climbed yesterday as Federal Reserve interest rate hike bets and a risk-off mood underpinned the currency.
However, USD trimmed its gains in the afternoon after the latest ISM manufacturing PMI for the US missed forecasts.
Turning to today, the latest US factory orders data could influence the ‘greenback’. A forecast recovery in July could lift USD.
Canadian dollar (CAD) undermined by trade war fears
The crude-linked Canadian dollar (CAD) was mixed yesterday, despite rising oil prices, with CAD losing ground against its stronger rivals due to US-Canada trade tensions.
The Bank of Canada (BoC) is due to announce its latest interest rate decision today. However, with no change to policy expected, trade news and oil price dynamics could drive the Canadian dollar.
Australian dollar (AUD) fluctuates despite upbeat GDP
The Australian dollar (AUD) wavered overnight. While stronger-than-forecast GDP figures supported AUD, a risk-off mood limited the currency’s potential.
New Zealand dollar (NZD) slumps despite RBNZ rate hike
The New Zealand dollar (NZD) plunged last night following the Reserve Bank of New Zealand’s (RBNZ) interest rate decision. Although the bank raised rates, it struck a slightly dovish tone about the need for further hikes.
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