Pound (GBP) rallies on BoE divergence
The pound (GBP) trended higher against the majority of its peers yesterday, supported by the expected divergence between the Bank of England (BoE) and other major central banks.
GBP investors are betting the BoE will leave its policy untouched through the remainder of the year, meaning higher interest rate returns for Sterling than many other currencies.
In the meantime, Sterling is strengthening this morning, as a further cooling of the UK labour market appears not to have hurt hawkish BoE rate bets.
Euro (EUR) pressured as French credit rating downgraded
The euro (EUR) ticked lower on Monday as EUR investors reacted to the news that ratings agency Fitch had downgraded France’s credit rating after Friday’s session closed.
However, the single currency’s losses were tempered, thanks to its inverse trading relationship with the US dollar (USD).
Germany's latest ZEW economic sentiment index will be in the spotlight for EUR investors today, with the euro poised to fall if this month’s survey reports another deterioration of morale.
US dollar (USD) slides on dovish Fed bets
The US dollar stumbled out of the gate this week, pressured by dovish bets ahead of the Federal Reserve’s interest rate decision on Wednesday.
A 25-basis-point rate cut is widely expected, but some USD investors are wary that there may be more than just token support for a 50bps cut this month.
Today sees the release of the latest US retail sales data. Sales growth is forecast to have slowed again last month, potentially compounding Fed rate cut bets and extending the USD decline.
Canadian dollar (CAD) subdued despite rising oil prices
The Canadian dollar (CAD) was muted on Monday as the currency’s positive correlation with the US dollar overshadowed a continued rise in oil prices.
Looking ahead, the focus for CAD investors today will be on Canada’s latest consumer price index. If inflation continued to undershoot expectations in August, it’s likely to cement bets for a Bank of Canada (BoC) rate cut on Wednesday and pull the ‘loonie’ lower.
Australian dollar (AUD) steady on RBA Hunter comments
The Australian dollar (AUD) traded in a narrow range overnight on Monday, following remarks from Reserve Bank of Australia (RBA) Assistant Governor Sarah Hunter, in which she suggested that the bank is ‘close to getting inflation to target’.
New Zealand dollar (NZD) buoyed by risk-on flows
The New Zealand dollar (NZD) appreciated in overnight trade, lifted by a continued improvement in market risk appetite.
Never miss a movement. Create a free account with Currencies Direct to get the latest currency news delivered straight to your inbox. You can also set up rate alerts and check live rates 24/7.
