The Pound is little changed against its major peers due to a lack of domestic market-moving data releases. The currency could come under pressure from risk aversion as British Prime Minister David Cameron builds a case for the UK to join in combat operations against the Islamic State. Due to the lack of data, the currency will remain vulnerable to events in the Eurozone and shifts in the geopolitical scene.
The US Dollar softened against most of its major peers as investors continued to lock in gains and sell the currency for profit. The ‘Greenback’s’ recent rally has come to an end for now, but if the latest New Home Sales data (due to be released later in the session) comes in positively the currency’s uptrend could resume.
The Euro was able to make gains against the US Dollar but was little changed against the Pound despite data showing that the Eurozone’s Composite output index (which combines the output from both manufacturing and service sectors) fell to a nine-month low. The currency is likely to experience movement if the latest IFO data out of Germany comes in positively.
The ‘Aussie’ was higher against the US Dollar on Wednesday, pulling away from a seven-month low, after the release of positive Australian data. Gains are expected to remain limited however as Tuesday’s US manufacturing data continues to boost the ‘Greenback’.
New Zealand Dollar
The New Zealand Dollar advanced against the Pound and other major peers due to the release of positive trade balance data. The report showed that New Zealand’s trade deficit narrowed last month, beating expectations for the deficit to widen.
The ‘Loonie’ was little changed against the US Dollar and Pound on Wednesday but was vulnerable to losses as crude oil prices declined to its lowest level in two-years. The currency was also under pressure from risk aversion as the war against Islamic State intensifies.
South African Rand
The Rand dropped overnight on fears that the South African government would not be able to afford the price tag of a deal made with Russia for nuclear power. The currency then rallied after South African officials clarified that the agreement signed with Russian atomic agency Rosatom was part of a tender process that would involve other countries and not a contract to build power plants.
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