Australian Dollar Firms on Upbeat Employment Data

Australian Dollar (AUD) Rises as Employment Data Impresses

The Australian Dollar (AUD) trended higher yesterday as Australian jobs data revealed a lower-than-expected unemployment rate.

The number of people in employment also surprised to the upside, increasing by 64.8K rather than the 43.3K expected in December as restrictions eased amidst rising vaccination rates. Also buoying the ‘Aussie’ was an overall upbeat market mood.

A lack of data today leaves AUD to trade on external factors. If risk sentiment remains bullish, the currency may enjoy further support.

Pound (GBP) Trades Mixed on Lack of Data, Persistent Inflation Tailwinds

The Pound (GBP) maintained a positive trajectory against several of its peers on Thursday, despite a lack of significant data.

Sterling was buoyed by the prospect of monetary policy tightening from the Bank of England (BoE), given Wednesday’s high inflation rate. Capping gains, however, were ongoing concerns regarding household inflation, with two-thirds of UK households reported that living costs jumped in January.

Into tomorrow, GBP exchange rates could be affected by the UK’s latest retail sales figures, with a slump in sales growth potentially dragging on the Pound.

Euro (EUR) Weakens on Dovish ECB Commentary

The Euro (EUR) fell yesterday, despite higher-than-expected PPI data from Germany. Finalised CPI data for the Eurozone also confirmed a record jump in inflation last month.

The Euro faced downside, however, as the European Central Bank (ECB) showed little sign of hiking interest rates: ECB President Christine Lagarde argued that ‘There are no reasons for us to act in the same way as the US Federal Reserve.’

A speech from the ECB’s Edouard Fernandez-Bollo may inspire bullish EUR trading today, if a hawkish tone is struck. A subsequent speech by President Lagarde could see her repeat her dovish message.

US Dollar (USD) Slumps on Strong Risk Appetite, Poor Jobs Data

The US Dollar (USD) tumbled on Thursday as a risk-on market mood dampened the appeal of safe-haven currencies. Also exerting headwinds, both initial and overall jobless claims rose over Christmas and into January.

Initial claims increased to 286K in the week to January 15, while the 4-week average of benefit claimants rose to 231K: analysts blame a surge in Covid cases and record quit rates.

Looking ahead, a shortage of significant US data leaves the ‘Greenback’ to trade on external factors – if bond yields continue to recover on Federal Reserve rate hike bets, USD could enjoy some upside today.

Canadian Dollar (CAD) Firms Overall on WTI Dynamics

The Canadian Dollar (CAD) gained against the majority of its peers yesterday as WTI crude prices climbed above $85 per barrel despite overbought conditions. Analysts consider that occasional bouts of weakness are seen as temporary and corrective only.

Upbeat retail data could inspire further upside today – sales are expected to have increased by 1.2% in December.

New Zealand Dollar (NZD) Fluctuates as China Eases Monetary Policy

Trade in the New Zealand Dollar (NZD) was mixed on Thursday as risk sentiment improved and China lowered mortgage lending benchmark rates in an attempt to prop up a slowing economy, but the closure of New Zealand’s borders offset these positive factors.

Data Releases

Jan 21st 10:01 GBP Gfk Consumer Confidence (Jan) -15
Jan 21st 17:00 GBP Retail Sales (Dec) -0.6%
Jan 21st 20:30 EUR ECB Fernandez-Bollo Speech N/A
Jan 21st 22:30 EUR ECB President Lagarde Speech N/A
Jan 21st 23:00 GBP BoE L Mann Speech N/A
Jan 21st 23:30 CAD Retail Sales (Nov) 1.2%
Jan 22nd 01:00 EUR Consumer Confidence Flash (Jan) -9

 

Mathew Andrews

mathew.andrews@torfx.com


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