Australian Dollar Falls on Risk-Off Mood

Australian Dollar (AUD) Nosedives on Risk-Off Trading

The Australian Dollar (AUD) fell on Thursday as a risk-off mood dented the appeal of the ‘Aussie’. Investors traded with a bearish bias on weaker equities and Covid-19 headwinds.

In Australia, more than 71,000 new infections were recorded earlier this week. Meanwhile, test shortages have compelled Prime Minister Scott Morrison to relax testing criteria, inspiring some criticism.

Looking ahead, a lack of data today leaves AUD to trade on external factors: further coronavirus headwinds could subdue the currency.

Pound (GBP) Muted amidst NHS Staff Shortage

The Pound (GBP) dipped against several peers yesterday as NHS staffing pressures continued to weigh upon the currency.

According to NHS officials, hospital bosses are ‘extremely concerned’ about the widening ratio of staff to patients. Several NHS trusts have already declared critical incidents as priority services are jeopardised.

Meanwhile, further criticism of the government’s handling of Omicron infections may exert further pressure, with risk sentiment also likely to influence the direction of GBP exchange rates.

Euro (EUR) Climbs as German Inflation Exceeds Estimates

The Euro (EUR) trended up against the majority of its peers on Thursday as German inflation revealed that prices went up in December by more than expected.

While only fractionally above forecasts, the data proves than inflation is still a problem in the bloc’s largest economy, putting pressure upon the European Central Bank (ECB) to tighten its monetary policy.

Today’s Eurozone inflation data will likely impact Euro trading ahead: if this also increases on last month, the single currency could extend gains in hopes it will force the ECB to rethink its policy outlook for 2022.

US Dollar (USD) Trades Mixed on Widening Trade Deficit

The US Dollar (USD) wavered yesterday as a greater-than-expected trade deficit exerted downside and initial jobless claims increased in the last week of December.

Capping losses, however, a risk-off mood drew investors towards safe-haven currencies as the 10-year US Treasury bond yield jumped to its strongest level since March. Yesterday’s hawkish minutes from the FOMC also extended support.

Looking ahead, US data overnight will reveal December’s unemployment rate alongside non-farm payrolls. If unemployment declined as expected, USD may see further gains.

Canadian Dollar (CAD) Firms on Trade Surplus

The Canadian Dollar (CAD) climbed against several peers on Thursday as the country’s balance of trade revealed a greater-than-expected trade surplus. The news helped CAD investors brush off a modest fall in oil prices.

Canadian employment data may support the ‘Loonie’ further tomorrow, if Canada’s unemployment rate remains at a pandemic-low of 6%.

New Zealand Dollar (NZD) Plummets on Market Sentiment

The New Zealand Dollar (NZD) crashed against the majority of its peers yesterday on risk-off trading sentiment and a lack of significant data. Upbeat Chinese PMI data failed to support the ‘Kiwi’, despite the two countries’ string trading relationship.

Data Releases

Jan 7th 17:00 EUR German Balance of Trade (Nov) €14.2B
Jan 7th 17:00 EUR German Industrial Production (Nov) 1%
Jan 7th 20:00 EUR Inflation Rate Flash (Dec) 4.7%
Jan 7th 20:00 EUR Retail Sales (Nov) -0.5%
Jan 7th 20:00 EUR Economic Sentiment (Dec) 116
Jan 7th 23:30 CAD Unemployment Rate (Dec) 6%
Jan 7th 23:30 CAD Employment Change (Dec) 27.5K
Jan 7th 23:30 USD Non-Farm Payrolls (Dec) 400K
Jan 7th 23:30 USD Unemployment Rate (Dec) 4.1%
Jan 8th 01:00 CAD Ivey PMI s.a (Dec) 61
Jan 8th 01:00 USD Fed Daly Speech N/A
Jan 8th 03:15 USD Fed Bostic Speech N/A
Jan 8th 03:30 USD Fed Barkin Speech N/A


Mathew Andrews