Australian Dollar (AUD) Sinks on Risk-Off Trading Sentiment
The Australian Dollar (AUD) tumbled against its peers on Friday as a downbeat market mood subdued demand for risk-off currencies.
Contributing to the bearish trading conditions were ongoing political tensions between Russia and Ukraine, as well as an aggressive policy tightening outlook from the Federal Reserve. Meanwhile the Reserve Bank of Australia (RBA) is expected to wait until late 2022 before hiking interest.
Today, an increase in December’s manufacturing activity could bolster the ‘Aussie’: the Ai group manufacturing index predicts a rise from 54.8 to 55.
Pound (GBP) Supported by Risk Aversion despite Lack of Data
The Pound (GBP) firmed against several peers at the end of last week despite political headwinds and scarce UK data.
As markets continued to wait for Sue Gray’s report into the ‘Partygate’ scandal and UK-EU tensions mounted, Sterling was nevertheless able to climb as its risk-on rivals struggled to find a foothold.
The Pound may affected today by developments regarding Gray’s report. If evidence emerges that Boris Johnson deliberately broke lockdown regulations, the Prime Minister may be forced to resign.
Euro (EUR) Strengthens on USD Weakness, Mixed GDP Releases
The Euro (EUR) came under pressure on Friday evening as Germany’s GDP growth rate missed expectations: the country’s economy contracted by 0.7% in the fourth quarter.
Capping losses, however, the US Dollar subsequently fell, lending EUR upside. Also buoying the single currency, France posted its strongest growth in over 50 years, as French GDP expanded by 7% last year.
Eurozone GDP will be released later today, and is expected to reveal expansion in the Eurozone economy. Potentially capping EUR gains however, German inflation is expected to have fallen to 4.3%.
US Dollar (USD) Wavers on Mixed Data Releases
The US Dollar (USD) dropped against several peers at the end of last week, as various data releases missed expectations.
Core PCE and personal spending figures printed roughly in line with forecasts, but headline PCE fell short of expectations alongside personal income and wage growth. Meanwhile, consumer sentiment fell by more than predicted, according to data from the University of Michigan.
The Chicago PMI and Dallas Fed manufacturing index could inspire further downside today, as both are expected to show reduced activity in January.
Canadian Dollar (CAD) Fluctuates on Unsteady Oil Trading
The Canadian Dollar (CAD) traded in a mixed range on Friday as WTI crude prices were buoyed by geopolitical tensions, but a hawkish commentary from the Fed pressured currencies facing a slower pace of monetary policy tightening.
New Zealand Dollar (NZD) Dips on Low Risk Appetite
The New Zealand Dollar (NZD) weakened against the majority of its peers at the end of last week, as risk-off trading sentiment drew support away from the currency.
Tomorrow morning, the ‘Kiwi’ may enjoy tailwinds if New Zealand’s trade balance reveals a NZ$343m surplus as expected.
Data Releases
Jan 31st 20:00 EUR GDP Growth Rate Flash (Q4) 4.7%
Jan 31st 23:00 EUR German Inflation Rate Prelim (Jan) 4.3%
Feb 1st 00:45 USD Chicago PMI (Jan) 62.5
Feb 1st 01:30 USD Dallas Fed Manufacturing Index (Jan) 8
Feb 1st 07:30 AUD Ai Group Manufacturing Index (Dec) 55
Feb 1st 07:30 AUD Ai Group Manufacturing Index (Jan) 53.1
Feb 1st 07:45 NZD Balance of Trade (Dec) NZ$343m