The Pound fell against the US Dollar as economists forecast that the session’s data releases will show that UK inflation slowed, adding pressure on the Bank of England to maintain interest rates at record lows. Also weighing on the currency were comments made by Bank of England Governor Mark Carney who said that soft global demand is producing a weak inflation outlook.
The US Dollar managed to rally against the Japanese Yen and recover from a one-month low. The USD/JPY pairing advanced due to speculation that the North American currency’s longest losing streak since July was unjustified as economic growth in the US will outpace that of Japan.
The Euro fell against the US Dollar and other peers as data showed that France recorded a monthly inflation rate of -0.4%. Consumer prices in the Eurozone’s second-largest economy fell 0.4% in September from August and were 0.3% higher than in September last year. Economists had expected a drop of 0.2%.
The ‘Aussie’ held onto gains against the US Dollar despite comments made by Reserve Bank of Australia Assistant Governor Guy Debelle regarding the ‘Aussie’ remaining overvalued. Also putting pressure on the currency was domestic data showing that business confidence fell in September.
New Zealand Dollar
On Tuesday the New Zealand Dollar was holding onto gains recorded following Monday’s positive Chinese trade data. Currency markets have been volatile for the past week because of concerns about the outlook for growth in major economies including Europe, China and Japan, but yesterday’s report eased some those concerns.
With Canadian data lacking until the end of the week, the ‘Loonie’ remains under pressure from falling oil prices. Crude oil fell close to a 4-year low on Monday as weak global economic growth dented demand for the commodity and Canada’s most traded export.
South African Rand
The Rand softened against the Pound and other peers due to a lack of domestic data releases and as some of the optimism generated by Monday’s positive Chinese trade data eased. The next major data release for South Africa comes on Wednesday with the publication of the latest Retail Sales figures.
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