Pound (GBP) Fluctuates on CPI Release
The Pound (GBP) wavered through yesterday’s session, trending upwards overall, as markets digested the UK’s 3.2% surge in inflation.
The record jump in inflation was in part due to low base effects caused by last August’s Eat Out to Help Out scheme, which, along with concerns over rising prices hitting British consumers, offset Sterling’s upside.
With no notable UK data out today, domestic headlines could have a big impact on GBP exchange rates.
Euro (EUR) Dips despite Industrial Production
The Euro (EUR) trended lower against most of its rivals yesterday, despite better-than-expected industrial production figures from the Eurozone.
Industrial output grew by 1.5%, beating forecasts of 6%, recovering from two successive months of contraction. However, EUR investors seemed unimpressed and the Euro ticked lower over the afternoon.
Looking ahead, the Eurozone’s trade surplus is expected to widen from €18.1bn to €30.2bn. If the figures meet the forecast, this could support EUR exchange rates.
US Dollar (USD) Flat amid Mixed Market Mood
The US Dollar (USD) traded sideways yesterday amid a mixed market mood and persisting headwinds from Tuesday’s disappointing CPI release.
US core inflation unexpectedly eased month-on-month in August, dashing USD bulls’ hopes of continued high inflation pressuring the Federal Reserve into tightening monetary policy. Yet this was offset by US industrial output recovering to pre-pandemic levels.
The ‘Greenback’ could face some challenges later today, as US retail sales are expected to shrink by 0.8% and initial jobless claims are forecast to rise.
Canadian Dollar (CAD) Strengthens as WTI Crude Breaks Past $73 a Barrel
The oil-sensitive Canadian Dollar (CAD) firmed yesterday after WTI crude climbed to $73 a barrel before holding steady at around $72.60, thereby supporting the ‘Loonie’.
Oil prices could continue to influence CAD exchange rates today, while the currency may also find support after the ADP employment change figures, as Canada is expected to have added another 180,000 jobs in August.
Australian Dollar (AUD) Dips as Market Mood Sours
The Australian Dollar (AUD) fell overnight, as a souring market mood and mixed employment data sapped demand for the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Softens as Risk Appetite Fades
The New Zealand Dollar (NZD) also ticked lower against many of its peers in overnight trade, with the perceived riskier ‘Kiwi’ dented by the bearish mood among investors, which led to NZD investors shrugging off New Zealand’s stronger-than-expected GDP figures.