Australian Dollar (AUD) Trends Up on Upbeat Market Sentiment
The Australian Dollar (AUD) rose yesterday as a strong risk appetite bolstered the currency against the majority of its peers.
Expectations of hawkish signalling from the Federal Open Market Committee (FOMC) raised morale, alongside hopes that the Reserve Bank of Australia (RBA) may follow suit. Australia’s headline CPI rose by 1.3% in the final quarter of 2021, pushing the yearly rate to 3.5%.
A lack of data leaves the ‘Aussie’ to trade on risk appetite again today – if market sentiment remains risk-on, AUD could find continued support.
Pound (GBP) Wavers Amidst ‘Partygate’ Headwinds – Risk Sentiment Caps Losses
The Pound (GBP) traded in a mixed range on Wednesday as investors awaited a report investigating Boris Johnson’s alleged lockdown parties.
Political tensions weighed upon GBP as reporters speculated that the Prime Minister may be forced to leave office. Meanwhile, Sterling’s losses were capped by a risk-on market mood, buoying the Pound against its safe-haven rivals.
Into today, the Pound may find support on distributive trades data from the Confederation of British Industry (CBI). The survey’s retail sales balance is expected to have increased through January so far.
Euro (EUR) Trades Mixed on Risk Appetite, USD Dynamics
The Euro (EUR) recovered against several peers yesterday afternoon despite US Dollar (USD) upside, as upbeat trading sentiment lent support.
Earlier in the day, the single currency slumped as USD trended up – the Euro also faced pressure on uncertainty over the Italian Presidential election. Investors worried that Prime Minister Mario Draghi may win the vote, leaving his current role and jeopardising the government’s stability.
German data could influence exchange rates today: consumer confidence is expected to have fallen this year, potentially exerting EUR headwinds.
US Dollar (USD) Strengthens on March Rate Hike Bets
The US Dollar firmed in midweek trade in spite of a generally upbeat market mood. USD trading was buoyed as investors anticipated hawkish signalling from the Federal Open Market Committee (FOMC).
Markets braced for America’s central bank to announce it will hike interest in March, in order to combat rapidly rising inflation: the Consumer Price Index (CPI) has been above 5% for seven months, above 6% for the last three and at 7% in December.
US GDP will be in the spotlight today: the consensus predicts that the US economy grew by 5.5% in the final quarter of 2021. Meanwhile, durable goods orders are expected to have fallen, potentially limiting USD gains.
Canadian Dollar (CAD) Fluctuates on BoC Interest Decision
The Canadian Dollar (CAD) traded in a narrow range on Wednesday as the Bank of Canada (BoC) decided not to hike interest rates. Capping downside, policymakers signalled that a rate hike would likely be coming in March.
Meanwhile, WTI oil prices surpassed $87 per barrel, approaching a multi-year high as geopolitical tensions and OPEC+ concerns threatened supplies from elsewhere.
New Zealand Dollar (NZD) Climbs on Risk-On Mood
The New Zealand Dollar (NZD) rose overall yesterday, in advance of the country’s annual inflation report. Economists anticipated a rise in the CPI, potentially pressuring the Reserve Bank of New Zealand (RBNZ) to tighten monetary policy.
Data Releases
Jan 27th 17:00 EUR German Gfk Consumer Confidence (Feb) -7.8
Jan 27th 21:00 GBP CBI Distributive Trades (Jan) 13
Jan 27th 23:30 USD GDP Growth Rate (Q4) 5.5%
Jan 27th 23:30 USD Durable Goods Orders (Dec) -0.5%
Jan 27th 23:30 USD Initial Jobless Claims (22/Jan) 260K