Pound (GBP) undermined by budget uncertainty
The pound (GBP) struggled to gain traction on Tuesday as investors remained cautious ahead of next week’s critical autumn budget.
GBP investors are growing increasingly concerned that Chancellor Rachel Reeves’s budget will be received poorly by markets, with a further complication of the UK’s tax system potentially placing additional strain on growth.
The UK’s consumer price index showed that domestic inflation slowed to 3.6% last month. While the cooling of inflation will be a relief to the government, the pound is facing headwinds as the data bolsters bets for a Bank of England (BoE) interest rate cut next month.
Euro (EUR) left adrift amid lull in data
The euro (EUR) lacked direction on Tuesday as a quiet Eurozone calendar left the single currency without a clear catalyst.
The single currency eventually found some support as the US dollar (USD) weakened, although the resulting gains were extremely modest.
The Eurozone will publish its own CPI figures today. While the impact may be minimal if October’s finalised inflation figures match initial estimates, any unexpected revisions could spark volatility in the euro.
US dollar (USD) dented by worrying jobs data
The US dollar initially strengthened yesterday, as fears of a market correction in AI-linked stocks bolstered safe-haven demand.
However, the ‘greenback’ then relinquished these gains on the back of underwhelming US jobs data, which revived concerns about the resilience of the labour market.
Coming up, the Federal Reserve will publish the minutes from its latest policy meeting during Wednesday’s US trading session. If policymakers strike a hawkish tone, it's likely to lift USD sentiment.
Canadian dollar (CAD) firms as Carney passes his first budget
The Canadian dollar (CAD) trended broadly higher on Tuesday as CAD investors were relieved that Prime Minister Mark Carney was able to pass his first federal budget.
Oil price dynamics may drive movement in the ‘loonie’ today, with CAD exchange rates potentially weakening if crude prices continue to drop.
Australian dollar (AUD) pressured by stock market jitters
The Australian dollar (AUD) retreated overnight on Tuesday, with investors shunning the risk-sensitive ‘Aussie’ amid the ongoing selloff in global equities.
New Zealand dollar (NZD) slumps on RBNZ rate cut bets
The New Zealand dollar (NZD) also came under pressure in overnight trade as a further slowdown in producer input prices reinforced bets that the Reserve Bank of New Zealand (RBNZ) will continue its cutting cycle.
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