Pound (GBP) struggles despite forecast-beating data
The pound (GBP) found itself under pressure yesterday, despite better-than-expected government borrowing and a stronger-than-forecast UK services PMI.
Although the UK’s vital services sector expanded strongly in August, a steady decline in employment unnerved GBP investors. Meanwhile, the positive borrowing figures were not enough to dispel expectations of tax hikes in the autumn.
With UK data thin on the ground today, Sterling could end the week trading without a clear trajectory.
Euro (EUR) falters as Ukraine hopes fade
The euro (EUR) enjoyed modest support at the start of yesterday’s session after the Eurozone’s manufacturing PMI revealed a surprise expansion in factory activity this month.
However, the common currency later came under pressure due to fading optimism for a Russia-Ukraine peace deal, EUR’s negative correlation with a rising US dollar (USD), and a larger-than-expected drop in Eurozone consumer confidence.
Germany’s final GDP reading for the second quarter is unlikely to impact EUR today unless it deviates from the previous estimate. As a result, EUR investors may focus on reporting around Russia-Ukraine peace efforts.
US dollar (USD) rebounds on strong PMIs
The US dollar wavered yesterday, with a risk-off mood and rising US jobless claims creating a mixed trading environment for USD.
The ‘greenback’ was able to find its footing in the afternoon, however, thanks to surprisingly strong expansions reported by the latest manufacturing and services PMIs.
Today, the focus falls on Federal Reserve Chair Jerome Powell’s keynote speech at the Jackson Hole Symposium. If Powell uses the speech to signal a dovish shift in policy over the coming months, USD could slide.
Canadian dollar (CAD) subdued by sliding oil prices
The crude-linked Canadian dollar (CAD) was dented by falling oil prices yesterday, although CAD’s positive correlation with USD helped it recoup some losses against weaker rivals in the afternoon.
Canada’s retail sales report for July is due today. The Canadian dollar could decline if it reveals another contraction in sales growth.
Australian dollar (AUD) flat amid uncertain market mood
The Australian dollar (AUD) was muted overnight as a mixed market mood confined the risk-sensitive ‘Aussie’ to a narrow range.
New Zealand dollar (NZD) softens amid weak risk appetite
The New Zealand dollar (NZD) ticked lower overnight, as NZD struggled to attract support amid the lukewarm market mood.
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