Pound (GBP) pressured by budget warning
The pound (GBP) stumbled yesterday amid fresh concerns over Chancellor Rachel Reeves’s autumn budget.
This followed a warning from the Institute for Fiscal Studies that the Chancellor risks ‘unnecessary economic damage’ if she focuses too much on the political optics of her budget.
The pound is under fresh pressure this morning, as a softer-than-expected UK jobs report is reviving bets the Bank of England (BoE) may deliver another interest rate cut this year.
Euro (EUR) pressured by scepticism about new French government
The euro (EUR) faced an uphill battle on Monday as French President Emmanuel Macron’s decision to reappoint Sébastien Lecornu as Prime Minister didn’t inspire a great deal of confidence from EUR investors.
While the move allowed Macron to sidestep immediate legislative elections, investors remain sceptical that Lecornu’s second chance will bring any lasting stability.
Germany’s latest ZEW survey may offer the euro some respite from French politics today. If economic sentiment continued to improve this month, it might allow the single currency to claw back some of its recent losses.
US dollar (USD) rocked by US-China trade uncertainty
US markets were closed for Columbus Day on Monday, but volatility in the US dollar (USD) remained pronounced amid US-China tariff jitters.
In a social media post on Sunday, US President Donald Trump appeared to walk back his threats for ‘massive’ tariffs on China, casting further uncertainty over the trade relations between the world’s two largest economies.
A speech from Federal Reserve Chair Jerome Powell will accompany the reopening of US markets later today. A hawkish tilt to Powell’s remarks could temper Fed rate cut bets and lift the US dollar.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) strengthened on Monday, with the commodity-linked currency being underpinned by a rebound in oil prices.
Oil price dynamics will likely continue to drive movement in CAD exchange rates today. If crude continues to appreciate, it will likely pull the ‘loonie’ higher with it.
Australian dollar (AUD) stumbles following RBA minutes
The Australian dollar (AUD) trended lower overnight on Monday as the minutes from the Reserve Bank of Australia’s (RBA) September policy meeting struck a slightly dovish tone, with policymakers noting that the bank’s current policy is still restrictive.
New Zealand dollar (NZD) slides on RBNZ rate cut bets
The New Zealand dollar (NZD) also retreated in overnight trade, pressured by a cautious mood and Reserve Bank of New Zealand (RBNZ) rate cut bets.
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