Euro stable as Eurozone inflation climbs to four-month high

Pound (GBP) flat following BoE stability report

The pound (GBP) was left to trade without a strong directional bias on Friday as GBP investors digested the Bank of England’s (BoE) latest Financial Stability Report.

The BoE reported that while risks to the global economy are rising, household finances in the UK remain fairly resilient.

Coming up, the UK will publish its latest manufacturing PMI this morning. But barring a notable revision to November’s finalised figures, its impact on Sterling may be negligible.

Euro (EUR) steady as Eurozone inflation rises

The euro (EUR) was stable at the end of last week’s session, following the release of the Eurozone’s latest consumer price index.

While November’s preliminary figures showed that Eurozone inflation accelerated to a four-month high, analysts suggested it was unlikely to dissuade the European Central Bank (ECB) from pursuing an interest rate cut next month.

EUR investors will look to a speech by ECB President Christine Lagarde for fresh impetus today. If she strikes a dovish tone, the euro may fall.

US dollar (USD) struggles amid thin trading conditions

The US dollar (USD) was muted on Friday, with the currency struggling to find support amid subdued market activity due to holiday-thinned trading conditions.

Further undermining the appeal of the ‘greenback’ was a decline in US Treasury yields.

The focus at the start of this week is likely to be on the latest ISM manufacturing PMI, with the US dollar potentially coming under pressure if US factory sector growth continued to contract in November.

Canadian dollar (CAD) dented by cooling GDP

The Canadian dollar (CAD) was subdued at the end of last week’s session as Canada’s latest GDP figures reported a slowdown in economic growth in the third quarter.

In the absence of any notable Canadian data at the start of this week, we are likely to see movement in the ‘loonie’ tied to oil price dynamics. Will a softening of oil prices drag CAD exchange rates lower?

Australian dollar (AUD) uncertain following mixed data

The Australian dollar (AUD) had a mixed start to this week’s session, as Australian company profits unexpectedly slumped in the third quarter, but October’s retail sales figure beat forecasts.

New Zealand dollar (NZD) mixed despite upbeat mood

The New Zealand dollar (NZD) also traded without a clear trajectory overnight, despite a risk-on market mood.