Pound (GBP) recovers as government vows fiscal credibility
After a sluggish start to the session, the pound (GBP) was able to find its footing and trend broadly higher on Friday.
GBP seemed to draw support from comments from Chancellor John Healey, who vowed to follow the government’s fiscal rules as he set a date for the Autumn Budget.
The only UK data release due today is the final manufacturing PMI. Confirmation of a modest improvement in factory activity last month may support Sterling, although any gains could be limited in scope.
Euro (EUR) rebounds as inflation beats forecasts
The euro (EUR) initially weakened on Friday as a risk-on mood dampened the appeal of the safer single currency.
However, EUR was able to recoup its losses in the afternoon after the Eurozone’s July consumer price index exceeded forecasts.
Germany’s latest retail sales report could weigh on the euro today, after revealing a larger-than-forecast 1.1% decline in June.
US dollar (USD) dented by improving mood
The US dollar (USD) softened at the end of last week, as markets continued to scale back bets on Federal Reserve interest rate hikes.
In addition, a cautiously upbeat market mood put pressure on the safe-haven ‘greenback’.
Turning to today, the latest ISM manufacturing PMI could determine the US dollar’s direction. If the data shows an improvement in factory activity in July, USD could strengthen.
Canadian dollar (CAD) falls despite forecast-beating GDP
The crude-linked Canadian dollar (CAD) initially edged up on Friday thanks to rising oil prices, although the currency later slipped despite better-than-forecast Canadian GDP figures.
With Canadian data thin on the ground today, oil price dynamics could drive the ‘loonie’. If crude prices fall amid easing tensions in the Middle East, CAD exchange rates could weaken.
Australian dollar (AUD) muted despite rise in inflation
The Australian dollar (AUD) had a subdued start to this week’s trade, despite the latest monthly inflation gauge showing a larger-than-forecast rise in prices in July.
New Zealand dollar (NZD) wavers as market mood shifts
The New Zealand dollar (NZD) opened this week on strong footing but quickly relinquished its gains amid an uncertain market mood.
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