Pound (GBP) muted amid Labour infighting
The pound (GBP) was confined to a narrow range yesterday amid the absence of any UK data of note.
Sterling sentiment was also suppressed by signs of Labour Party infighting after Prime Minister Keir Starmer’s allies moved to block Andy Burnham from standing as an MP and potentially challenging Starmer in a future leadership contest.
UK economic releases remain in short supply today, leaving the pound to trade without strong directional bias.
Euro (EUR) bolstered by softer USD
The euro (EUR) rallied on Monday, drawing the bulk of its support from its strong negative correlation with the US dollar (USD).
However, these gains were capped after Germany’s IFO business climate index fell short of expectations, dampening hopes for a strong start to the year for the Eurozone’s largest economy.
EUR data is also thin on the ground today, potentially limiting liquidity in the euro.
US dollar (USD) slips on tariff and shutdown concerns
The US dollar opened this week on the defensive, striking fresh multi-month lows amid US tariff and shutdown uncertainty.
This selloff then accelerated later in the session, with USD hitting near multi-year lows against some peers, despite upbeat data showing a larger-than-expected rebound in US durable goods orders in November.
Coming up, the latest ADP weekly employment figures could add to the pressure on the US dollar today, if they raise fresh concerns over US labour market resilience.
Canadian dollar (CAD) undermined by tariff threat
The Canadian dollar (CAD) stumbled on Monday in response to US President Donald Trump’s threat to impose a 100% tariff on Canadian goods if Canada makes a trade deal with China.
Unless we see another U-turn from Trump, these tariff concerns may continue to weigh on the ‘loonie’ today.
Australian dollar (AUD) finds temporary lift as business morale improves
The Australian dollar (AUD) wavered in overnight trade, with a better-than-expected domestic business confidence print only providing fleeting gains for the ‘Aussie’.
New Zealand dollar (NZD) muted in cautious trade
The New Zealand dollar (NZD) was also muted overnight on Monday as a cautious market mood sapped the appeal of the risk-sensitive ‘kiwi’.
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