The British Pound was holding at a two-year high against the Euro after data out of the 18-member currency bloc showed that inflation fell to its lowest level in five years. Sterling meanwhile remained supported by the release of a report which showed that the UK economy expanded at a faster rate than previously thought. The Pound could make further gains in Wednesday’s session if the latest domestic Markit/CIPS Manufacturing PMI report adds to signs that the UK economic recovery is continuing.

US Dollar

The US Dollar made gains against the Pound, Euro and other major peers after investors took fresh positions on the assumption that the Federal Reserve will end its bond-buying programme in October and increase interest rate in 2015. The ‘Greenback’ could make further gains later in the session if the latest ADP Employment and Manufacturing PMI data comes in positively.

The Euro

The Euro declined to new two-year lows against the Pound and US Dollar after Eurozone inflation data came in below expectations. Eurostat said that the Eurozone’s annual inflation rate fell to a five-year low of 0.3% last month. The data increases pressure on the European Central Bank to introduce fresh monetary stimulus measures.

Australian Dollar

The ‘Aussie’ fell against the Pound and slumped to a 9-month low against the US Dollar after it was weighed upon by the release of disappointing retail sales data. The report showed that retail sales rose by just 0.1% in August, below expectations for a rise of 0.4%.

New Zealand Dollar

The New Zealand Dollar remains near a one-year low as the US Dollar continues to weigh upon commodity and emerging market assets. With a lack of market moving economic data releases, the ‘Kiwi’ will be vulnerable to events elsewhere.

Canadian Dollar

The ‘Loonie’ weakened against the majority of its most traded peers after Canadian GDP data came in below expectations. According to Statistics Canada, the nation’s Gross Domestic Product remained flat in July, disappointing economist expectations for a rise of 0.2%. The report highlights the diverging trends of the US and Canadian economies.

South African Rand

The Rand fell sharply against the Pound and other major peers after domestic data showed that South Africa’s trade deficit widened sharply. The cumulative trade deficit now stands at R70.7bn, which is much larger than the corresponding period last year.

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