On Monday, the British Pound fell nearly 1% against the US Dollar, retreating from its highest level since the Brexit vote, after Bank of England (BoE) Governor Mark Carney said that any coming interest rate rises would be limited and gradual. Carney reiterated last week’s Central Bank’s message that record low interest rates could rise in coming months, but added that “many prospective increases in Bank rate would be expected to be at gradual pace and to a limited extent”.
Meanwhile, the Canadian Dollar weakened sharply against its US counterpart, as Bank of Canada (BoC) policymaker said that the currency’s strength will be a factor in future rate decisions. BoC Deputy Governor Timothy Lane said that the Central Bank, which has hiked twice since July, will be “taking that stronger Canadian Dollar into account pretty strongly in making our decisions”.
Investors were waiting for Canada’s manufacturing sales and wholesale trade data for July, due yesterday and tomorrow, respectively, and the August inflation report and retail sales data for July, due this Friday.
Gold prices inched up from its lowest in over two weeks on Tuesday as well, as the US Dollar shed some gains, while the market’s focus turned to a two-day Federal Reserve meeting that kicks off later in the day. At the FOMC meeting, the Fed is widely expected to announce plans to trim its balance sheet but will hold off raising rates for now.
Ongoing rifts between the United States and North Korea are likely to take centre stage at the UN General Assembly meeting later today, where President Donald Trump is set to speak for the first time.