Pound (GBP) firms as UK borrowing costs plunge
The pound (GBP) enjoyed broad support yesterday, as UK 10-year gilt yields fell to their lowest levels since early September.
The fall in borrowing costs was linked to a sharp drop in oil prices as well as expectations that the Bank of England (BoE) will kick-start a new hiking cycle on Thursday.
Turning to today, Sterling may be supported by the news that the UK and EU have agreed on a draft deal that will remove some post-Brexit red tape on food and agriculture exports.
Euro (EUR) bolstered by USD weakness
The euro (EUR) rallied on Monday, with the single currency being underpinned by its strong negative correlation with the US dollar (USD).
This allowed the euro to shrug off the news late last week that credit ratings agency Fitch had revised its outlook on French sovereign debt from stable to negative.
Meanwhile, with notable EUR data in short supply, the euro may struggle to build on these gains today.
US dollar (USD) slumps in risk-on trade
The US dollar faced notable selling pressure at the start of this week as a sharp fall in oil prices sapped the appeal of the safe-haven currency.
However, these losses were tempered later in the session, after the latest ISM manufacturing PMI reported stronger-than-expected growth in the US factory sector last month.
Turning to today's session, we may see US political uncertainty limit demand for the US dollar as polls open for the US mid-term elections.
Canadian dollar (CAD) falls in tandem with oil prices
The commodity-linked Canadian dollar (CAD) was outperformed by the majority of its peers on Monday, after global oil prices tumbled over 6%, amid fresh hopes for a diplomatic solution to the conflict in the Middle East.
Expect movement in the 'loonie' to remain linked to oil price dynamics today, with any further weakness likely to reinforce the CAD selling bias.
Australian dollar (AUD) slides as RBA delivers dovish hike
The Australian dollar (AUD) retreated in overnight trade, following a split decision by the Reserve Bank of Australia (RBA) to raise interest rates and some dovish forward guidance.
New Zealand dollar (NZD) firms in risk-on trade
The New Zealand dollar (NZD) strengthened overnight, with the currency benefitting from positive risk flows as domestic political jitters receded.
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