Yesterday, the Euro extended gains against its major peers following data showing German industrial output notched its biggest monthly increase in more than six years in August 2017. Moreover, hawkish comments from ECB executive board member Sabine Lautenschlaeger saying that the ECB should scale back its asset purchases next year with the aim to halt the program altogether, also helped lifting the common currency.
Meanwhile, Gold rallied against its US counterpart and hit $1,288.18, its strongest level in more than a week, as fresh concerns over North Korea’s nuclear ambitions stoked the Safe Haven demand for the precious metal. Federal Funds Futures showed that traders were pricing in a nearly 90% chance of a US interest rate hike in December 2017 which is weighting on the upside momentum.
On Monday, the British Pound rebounded, as stronger labour costs data hardened prospects of higher interest rates, and after Prime Minister Theresa May vowed to ward off challenges to her leadership. Meanwhile, expectations of interest rate hikes have grown in recent weeks after the BoE signalled it was prepared to increase rates in the “coming months” in mid-September.
On Tuesday as well, offshore Chinese Yuan surged against the US Dollar and touched 6.5790, its strongest in more than two-weeks, after the Central Bank lifted its official Yuan midpoint to 6.6273 per Dollar, its first firmer fixing since September 22. The move suggests that the authorities are trying to stabilize the currency ahead of next week’s national leadership meeting.