US dollar firms as Evergrande fears sour market sentiment

The US dollar trended broadly higher on Thursday, bolstered by a prevailing risk-off mood.

Meanwhile, the pound is off to a slow start this morning, with GBP/EUR dipping to €1.1846 and GBP/USD muted at $1.3793. GBP/CAD has retreated to C$1.7018, while GBP/AUD and GBP/NZD slide to AU$1.8403 and NZ$1.9209 respectively.

Looking ahead, the pound could face some headwinds today, following the publication of some disappointing domestic retail sales figures.

What’s been happening?

The US dollar strengthened yesterday, with the safe-haven currency attracting support as fresh fears over the potential collapse of Chinese property giant, Evergrande, soured market sentiment.

However, the ‘greenback’s gains were tempered somewhat towards the end of the European trading session, following the release of some mixed US data.

At the same time, the euro struggled to find any strong directional bias on Thursday, with another drop in Eurozone consumer confidence and ongoing concerns over the European Central Bank’s (ECB) dovish bias, limiting the appeal of the single currency.

The pound, meanwhile, was also left to trade in a narrow range during yesterday’s session, following some weaker-than-expected data from the Confederation of British Industry (CBI), which reported a sharp plunge in business confidence going into the fourth quarter.

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest retail sales figures, which has already undermined the pound this morning, after reporting sales growth slumped again in September.

These losses could be extended by the upcoming release of the UK’s latest PMI figures, which are expected to report that economic activity in the private sector continued to weaken at the start of the fourth quarter.

The publication of the Eurozone’s own PMI figures could have a similar impact on the euro this morning as they are also forecast to show a slowing of growth in both the manufacturing and service sectors in October.

Finally, whilst not as influential as the ISM releases, today’s US Markit PMIs could offer some direction to the US dollar, with a robust expansion in the US private sector this month potentially bolstering the appeal of the US dollar.