Euro and Sterling stumbled today as they responded to less than impressive economic indicators. Despite a slight uplift in German economic sentiment, the broader picture reflected deteriorating current situation, adding pressure on the common currency. Concurrently, the Pound exhibited a steeper reaction to the shrinking payroll employment coupled with the decelerated wage growth noted in August, accentuating the weak undercurrents plaguing the currency. Swiss Franc seemed to benefit, albeit modestly, from purchases made against its two European peers.
Dollar's spirited rally attempt faced a swift halt as major US stock indices recorded gains, positively influencing broader market sentiment. Following that, Asian markets are poised, with China's unexpected rate cut effectively counterbalancing the dampening effects of discouraging economic data. As a result, commodity currencies, including Australian Dollar, saw a resurgence.
European major currencies are making a notable stride today, with Sterling at the forefront. The Pound ascent is attributed to the historic high recorded in UK regular wage growth. This surge adds further weight to BoE dilemma, pushing it to seriously consider additional monetary tightening in the upcoming month.
Dollar's selloff gained momentum in today's Asian trading session, breaking through near-term support levels against Euro and Sterling. The market remains skeptical about the possibility of Fed implementing two or more rate hikes this year. With US CPI release scheduled for tomorrow, traders appear to be positioning themselves for potential downside surprises. Meanwhile, major US stock indexes closed slightly higher overnight, and benchmark 10-year yield slipped below 4% mark during Asian session.
British Pound sees a broad rally today, fueled by robust wage growth, indicating that secondary inflationary pressure remains persistent, which will likely force BoE to continue tightening. In contrast, Euro fell sharply due to plunging economic sentiment, leading to a downside breakout in EUR/GBP, resuming its recent downward trend.