US dollar firms as Fed official warns December rate cut is not guaranteed

Pound (GBP) steady as BoE’s Mann warns of high inflation

Trade in the pound (GBP) was mostly positive on Wednesday, as it drew support from comments by Bank of England (BoE) policymaker Catherine Mann.

Mann warned of upward risks to UK inflation and suggested it’s ‘important to hold (interest rates) for longer’.

BoE Governor Andrew Bailey is scheduled to speak later this evening. If his remarks echo the hawkish tone struck by Mann, the pound is likely to rise.

Euro (EUR) pressured by concerns over US trade policy

The euro (EUR) struggled to find momentum yesterday amid ongoing concerns over future US trade policy under Donald Trump.

EUR investors fear that a trade confrontation between the US and EU will severely impact the Eurozone economy and force the European Central Bank (ECB) to continue cutting interest rates.

Today’s session will see the publication of the minutes from the ECB’s latest policy meeting. If these signal that policymakers are contemplating another rate cut in December, the euro may slide.

US dollar (USD) buoyed by hawkish Fed remarks

The US dollar (USD) firmed during yesterday’s session in response to hawkish remarks by Federal Reserve policymaker Lorie Logan

Speaking in the wake of data showing that US inflation accelerated from 2.4% to a three-month high of 2.6% in October, Logan suggested markets may be a little too confident in a December rate cut.

Fed Chair Jerome Powell will speak later today. If he also appears to question the possibility of a December rate cut, we may see the US dollar propelled to new multi-month highs.

Canadian dollar (CAD) muted as oil prices slide

The Canadian dollar (CAD) was placed on the defensive on Wednesday as a softening of oil prices limited the appeal of the commodity-linked currency.

Oil price dynamics may continue to drive the ‘loonie’ today, in the absence of any notable Canadian economic data.

Australian dollar (AUD) slides as employment growth slows

The Australian dollar (AUD) trended lower in overnight trade as Australia’s latest jobs figures reported a sharper-than-expected slowing of employment growth last month.

New Zealand dollar (NZD) undermined by risk-off flows

The New Zealand dollar (NZD) also softened overnight on Wednesday as a cautious market mood saw investors shy away from the risk-sensitive currency.