Pound (GBP) uncertain amid lack of data
The pound (GBP) traded without a clear directional bias yesterday amid a lack of UK economic data.
GBP was also seemingly unfazed by Prime Minister Andy Burnham’s keynote speech at the Labour Party Conference, as the address focused primarily on the policies that will be in Labour's next manifesto.
Meanwhile, the pound is attracting fresh support this morning, as data showed the UK economy grew at a faster-than-expected pace through the second quarter.
Euro (EUR) dented by uptick in USD
The euro (EUR) softened against many of its rivals on Tuesday as the single currency suffered from its negative correlation with the rising US dollar (USD).
Eurozone data later in the session failed to help EUR recover. The bloc’s economic sentiment index unexpectedly declined in September, representing the first deterioration since April.
Looking forward, economic data from Germany today could support the euro. Markets expect to see a rise in inflation in September, which has the potential to support European Central Bank (ECB) interest rate hike bets.
US dollar (USD) buoyed by anxious trade
The US dollar trended higher yesterday as a risk-off market mood provided the safe-haven currency with support.
USD even managed to avoid losses in the afternoon despite a larger-than-forecast fall in job openings and an unexpected decline in US consumer confidence.
Turning to today, the US core PCE price index is forecast to show that inflation rose in August, which could underpin USD. However, confirmation that the American economy slowed in the second quarter could limit the currency’s gains.
Canadian dollar (CAD) underpinned by GDP recovery
The crude-linked Canadian dollar (CAD) shrugged off softening oil prices yesterday to edge higher against its weaker peers. A recovery in Canadian GDP in August helped support the currency.
With Canadian data in short supply today, oil price dynamics could drive the ‘loonie’. Markets will be keeping an eye on the Middle East, amid indirect talks between the US and Iran on ending the war.
Australian dollar (AUD) slumps on weaker-than-expected inflation
The Australian dollar (AUD) tumbled overnight on Tuesday as Reserve Bank of Australia (RBA) rate hike expectations were dampened further after domestic inflation fell short of expectations in August.
New Zealand dollar (NZD) dented by decline in business confidence
The New Zealand dollar (NZD) also stumbled in overnight trade in response to weaker-than-forecast business confidence data.
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