Australian Dollar Firms Overall on Risk-On Mood

Australian Dollar (AUD) Strengthens on Upbeat Market Mood

The Australian Dollar (AUD) climbed against its peers on Monday as bullish trading sentiment lent support to risk-sensitive currencies.

While Covid-19 infections in Australia have surpassed 1 million – more than half of those in the past week alone – Prime Minister Scott Morrison has struck an optimistic tone, likening Omicron to ‘a gear change we have to push through’.

Looking ahead, today’s trade balance is likely to affect AUD exchange rates: if the country’s trade surplus shrinks as expected, the ‘Aussie’ could experience some headwinds.

Pound (GBP) Falls as Brexit Regulations Harm British Manufacturing

The Pound (GBP) weakened yesterday amidst a lack of significant data, as news reports drew attention to Brexit headwinds.

According to a recent survey, two-thirds of industrial company leaders said Brexit had moderately or significantly hampered business so far. More than half anticipate further damage this year from customs delays due to import checks and product labelling changes.

Into today, retail data from the British Retail Consortium may influence GBP trading – the report is expected to reveal an increase in sales, albeit a smaller one than previously, which could lend some support.

Euro (EUR) Slumps as GDP Growth is Revised Down

The Euro (EUR) was subdued against its peers on Monday, amidst an environment of economic uncertainty.

Given recent Covid pressures, thinktank CEBR has revised its 2022 forecast of Eurozone GDP growth downwards: the potential return of stricter public health measures could exert further headwinds. Also weighing upon the single currency are rising energy prices across the continent.

European Central Bank (ECB) President Christine Lagarde is due to speak this evening – a dovish speech is likely to subdue EUR further.

US Dollar (USD) Firms on Central Bank Optimism

The US Dollar rose through yesterday’s session as markets anticipate imminent monetary policy tightening from the Federal Reserve. Upbeat FOMC minutes indicated such action last week, while better-than-expected wage growth encouraged optimism.

The ‘Greenback’ was also supported by rising US Treasury yields, which helped to reverse some initial losses driven by the market’s risk-on mood.

Today’s testimony by Fed Chairman Jerome Powell may influence trading, with further hawkish remarks likely to buoy the USD Dollar.

Canadian Dollar (CAD) Benefits from Rising Oil Exports

The Canadian Dollar (CAD) ticked up against several peers on Monday as crude oil exports to Asia hit a record high. The new US Gulf Coast link transports oil from landlocked Alberta to export terminals where it is shipped to India, China and South Korea.

New Zealand Dollar (NZD) Slides on Lack of Data

The New Zealand Dollar (NZD) tumbled through yesterday’s session as a lack of significant data exposed the currency to losses. Ongoing issues in the Chinese property sector may have dented NZD due to the countries’ strong trading relationship.

Data Releases

Jan 11th 10:01 GBP BRC Retail Sales Monitor (Dec) 1.5%
Jan 11th 10:30 AUD Balance of Trade (Nov) A$10.6bn
Jan 11th 10:30 AUD Retail Sales (Nov) 3.9%
Jan 11th 20:20 EUR ECB President Lagarde Speech N/A
Jan 12th 00:30 USD Fed George Speech N/A
Jan 12th 01:00 USD Fed Chair Powell Testimony N/A
Jan 12th 01:00 USD IBD/TIPP Economic Optimism (Jan) 48.3


Mathew Andrews