Pound (GBP) slips amid political developments
The pound (GBP) fell yesterday, despite stronger-than-forecast UK jobs data, amid concerns about how the new Prime Minister Andy Burnham would fund his fiscal plans.
Burnham appointed John Healey as Chancellor of the Exchequer, rather than market favourite Shabana Mahmood. In addition, reports that the PM would be announcing some tax cuts in the week ahead raised questions about how he would fund these policies.
Turning to today, the UK’s latest consumer price index is the focus. Softer-than-forecast headline inflation could pressure the pound, although steady core inflation could limit the downside.
Euro (EUR) unsure despite strong German data
The euro (EUR) traded without a clear direction yesterday, despite stronger-than-forecast German data.
The country’s latest ZEW economic sentiment index exceeded forecasts, rising from 10.5 to a five-month high of 26.3 in July. However, EUR struggled to gain ground against its stronger peers.
A lack of Eurozone data and tomorrow’s looming European Central Bank (ECB) interest rate decision could mute the euro today.
US dollar (USD) wavers as markets digest US-Iran news
The safe-haven US dollar (USD) initially dipped yesterday as risk appetite remained resilient despite the intensifying conflict in the Middle East.
However, the ‘greenback’ was able to recoup these losses later in the session.
With US data in short supply today, market risk dynamics may drive the US dollar. If the crisis in the Middle East intensifies, the safe-haven ‘greenback’ could gain ground.
Canadian dollar (CAD) shored up by rising oil prices
The Canadian dollar (CAD) faced pressure yesterday after US President Donald Trump announced plans to impose a 50% tariff on most Canadian goods.
However, rising oil prices boosted the commodity-linked ‘loonie’, helping temper CAD losses.
Crude prices could drive CAD exchange rates today amid a lack of Canadian data. Meanwhile, US-Canada trade tensions may continue to weigh on the ‘loonie’.
Australian dollar (AUD) pressured by risk-off mood
The Australian dollar (AUD) trended slightly lower overnight as a cautious market mood pressured the ‘Aussie’.
New Zealand dollar (NZD) unsupported amid cautious trade
The New Zealand dollar (NZD) also softened during Wednesday’s Asian trading session as market risk appetite faded.
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