Pound (GBP) extends post-inflation losses
The pound (GBP) remained on the defensive yesterday as Wednesday’s underwhelming consumer price index continued to drag on Sterling sentiment.
With inflation appearing to have peaked below the Bank of England’s (BoE) expectations, there is growing speculation the BoE will cut interest rates by the end of the year.
UK retail sales surprised to the upside this morning and the UK’s PMI figures also slightly beat forecasts. This could prompt some investors to trim their BoE rate cut bets and allow Sterling to close the week on a positive note.
Euro (EUR) rebounds amid improvement in consumer sentiment
The euro (EUR) initially faltered yesterday, before rebounding with the release of the Eurozone’s latest consumer confidence index.
October’s preliminary figures showed a surprise improvement in sentiment, with the index rising to its highest levels since February.
Today also sees the release of the Eurozone’s own PMI data, with a surprise acceleration of private sector growth this month potentially supporting the euro.
US dollar (USD) rangebound ahead of inflation release
The US dollar (USD) traded sideways on Thursday as USD investors were reluctant to make any aggressive bets ahead of Friday’s highly anticipated US CPI print.
As the only federal data release permitted during the government shutdown, more weight may be given to September’s US inflation report than usual.
If inflation accelerates as forecast, it could help to temper Federal Reserve rate cut bets and lift the US dollar, but a softer-than-expected reading may place significant pressure on USD.
Canadian dollar (CAD) muted as retail sales slump
The Canadian dollar (CAD) struggled to attract support on Thursday as data showing a slump in domestic retail sales last month offset a sharp appreciation of oil prices.
Meanwhile, the ‘loonie’ is already under notable pressure this morning after US President Donald Trump announced he is terminating trade talks with Canada, following an advert criticising US tariff policy.
Australian dollar (AUD) subdued on mixed PMI data
The Australian dollar (AUD) faced modest pressure through Friday’s Asian trading session in response to mixed PMI figures that reported an acceleration in service sector activity, but a shock contraction in the manufacturing sector.
New Zealand dollar (NZD) slips amid cautious mood
The New Zealand dollar (NZD) also softened in overnight trade amid waning investor risk sentiment.
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