Pound (GBP) slumps amid debt anxiety
The pound (GBP) faced notable headwinds yesterday as the Office for Budget Responsibility’s (OBR) latest report on fiscal risks fuelled concerns about the UK deficit.
The country’s fiscal watchdog warned that British public finances are ‘vulnerable’ and that risks are rising, with public debt on track to hit 270% of GDP by the 2070s under the current policy settings.
These fears could continue to weigh on Sterling today, amid a lack of fresh UK economic data.
Euro (EUR) stumbles amid trade concerns
The euro (EUR) weakened against most of its rivals yesterday as German exports and imports both fell far more than expected in May.
This was followed by a statement from German finance minister Lars Klingbeil, who warned that the EU is ‘ready to take countermeasures’ against the US if a fair trade deal cannot be agreed.
Later today, two senior figures from the European Central Bank (ECB) are due to deliver speeches. If Chief Economist Philip Lane and Vice-President Luis de Guindos both strike a relatively hawkish tone, EUR could attract support.
US dollar (USD) gains ground as Treasury yields rise
The US dollar (USD) ticked higher yesterday as rising US Treasury yields boosted the ‘greenback’.
This helped the safe-haven currency gain ground despite an improving market mood.
Looking forward, the Federal Reserve’s latest meeting minutes could impact USD. If they show signs that some policymakers are open to cutting interest rates, the US dollar could soften.
Canadian dollar (CAD) boosted by upbeat PMI
The Canadian dollar (CAD) rose against many of its peers yesterday as the latest Ivey PMI pointed to an unexpectedly strong improvement in business activity last month.
Oil price dynamics could be the primary factor influencing the crude-linked ‘loonie’ today amid a lack of Canadian economic data.
Australian dollar (AUD) wobbles in absence of data
The Australian dollar (AUD) wavered overnight amid a mixed market mood and a lack of Australian data.
New Zealand dollar (NZD) wavers following RBNZ decision
The New Zealand dollar (NZD) also fluctuated in a narrow range overnight. Although the Reserve Bank of New Zealand (RBNZ) left interest rates unchanged, markets still expect a cut in August.
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