Pound (GBP) gains capped by autumn budget jitters
The pound (GBP) edged higher on Monday, supported by the improvement in market sentiment.
However, Sterling’s upside remained limited as anxiety surrounding Chancellor Rachel Reeves’s upcoming autumn budget continued to sap Sterling sentiment.
Data showing that the UK unemployment rate jumped to a four-year high in September is weighing heavily on the pound this morning as signs of a slowing labour market are cementing bets the Bank of England (BoE) will cut interest rates next month.
Euro (EUR) muted amid positive risk flows
The euro (EUR) struggled to attract support on Monday as the relief rally across markets limited demand for safe-haven assets.
This was driven by both the US funding bill hopes as well as stronger-than-expected inflation figures out of China over the weekend.
The euro may receive a boost later today as the latest German ZEW economic sentiment index is forecast to report morale continued to improve this month.
US dollar (USD) subdued despite US funding bill optimism
The US dollar (USD) opened this week’s session on the defensive following the news that the US Senate narrowly passed a funding bill that could be the first step towards ending the US government shutdown.
While USD investors welcomed the news, it also sparked broader risk optimism, which undermined demand for the safe-haven currency.
Today sees the release of the new week-on-week ADP employment data, with the latest snapshot of the US jobs market potentially weighing on the US dollar if the data disappoints.
Canadian dollar (CAD) underpinned by rising oil prices
The Canadian dollar (CAD) firmed on Monday as rising oil prices reflected positively on the commodity-linked currency.
Assuming oil prices continue to appreciate, the ‘loonie’ may maintain this positive trajectory through today’s session.
Australian dollar (AUD) slides despite surge in consumer confidence
The Australian dollar (AUD) retreated overnight on Monday as renewed demand for the US dollar overshadowed stronger-than-expected domestic consumer confidence figures.
New Zealand dollar (NZD) slides in cautious trade
The New Zealand dollar (NZD) also retreated in overnight trade as a risk-averse mood sapped the appeal of the ‘kiwi’.
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