The EUR/USD pair settled at 1.1050, following key data indicating that the Eurozone economy is teetering on the brink of recession. Market sentiment could shift significantly on Thursday with the release of the US producer Price Index and the European Central Bank’s (ECB) interest rate decision, potentially impacting EUR/USD prices. In the absence of relevant economic data today, the pair is expected to trade based on general market sentiment.

USD Gains Strength Ahead of Economic Data Release

The USD gained momentum in a risk-averse market environment, with investors favouring the safe-haven currency. Amid concerns over a potential US recession, increased demand for the dollar and robust US Treasury yields provided support. The US Consumer Price Index report, due on Wednesday, followed by the Producer Price Index on Thursday, will help determine the Fed's upcoming rate decision.

Pound Stabilises Following Upbeat UK Employment Report

Sterling gained against major peers following the release of a mixed UK employment report for the three month period ending July 2024. The ILO Unemployment Rate eased to 4.1%,down from June’s 4.2%.. Average Earnings, Excluding Bonuses, came in at 5.1%, as expected, but lower than the previous 5.4%. Despite robust job growth, the deceleration in wage growth could fuel market speculation about upcoming BoE interest rate cuts.

Australian Dollar Buoyed by Improved Risk Sentiment

The AUD gained ground despite weaker-than-expected domestic consumer and industry confidence figures, buoyed by improved risk sentiment among traders. The Reserve Bank of Australia's (RBA) hawkish stance, coupled with upcoming US inflation figures and development in the Chinese economy, could further influence the currency’s trajectory.

Canadian Dollar Strengthened by Rising Oil Prices

The Canadian dollar stabilised as a rebounding oil prices provided support. The unemployment rate rose to 6.6%, higher than the estimated 6.5% and the previous 6.4%, potentially fuelling expectations of additional interest rate cuts by the Bank of Canada and weakening the CAD. Oil prices may continue to appreciate amid fears that Hurricane Francine disrupts crude production on the Louisiana coast, potentially bolstering the Canadian dollar further.

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