Australian Dollar (AUD) Trades Mixed on Low Risk Appetite
The Australian Dollar (AUD) sank against its peers yesterday as a downbeat market mood subdued the risk-on currency.
The events of ‘Super Thursday’ triggered a bearish attitude amongst investors, with traders reluctant to take any bets on the risk-sensitive ‘Aussie’ ahead of some major central bank interest rate decisions.
Looking ahead, today’s statement from the Reserve Bank of Australia (RBA) may influence AUD trading. Governor Philip Lowe struck a dovish tone on Tuesday: if today’s outlook remains unchanged, the ‘Aussie’ may experience headwinds.
Pound (GBP) Fluctuates Following BoE Rate Hike
The Pound (GBP) was infused with some notable volatility on Thursday after the Bank of England (BoE) announced a much-anticipated interest rate hike to 0.50%.
While the announcement and the news that some policymakers had voted to raise rates to 0.75% initially caused GBP exchange rates to spike, these gains quickly unravelled as the BoE warned about upcoming challenges and that interest rates are not on a ‘long march upwards’.
A lack of significant data in today’s session leaves Sterling to trade on external factors – any further developments regarding Boris Johnson’s tenability as Prime Minister of the UK could affect GBP exchange rates.
Euro (EUR) on 2022 Rate Hike Speculation
The Euro (EUR) caught some bids yesterday, amidst speculation the European Central Bank (ECB) might actually raise interest rates this year.
Whilst the ECB left its monetary policy untouched and reiterated its previous guidance on interest rates, EUR investors seized on comments by President Christine Lagarde in which she declined to state that a rate hike in 2022 is still unlikely.
Into today, German factory orders may influence the Euro, alongside construction PMIs and Eurozone retail sales. Sales are expected to have fallen in December, applying possible EUR downside.
US Dollar (USD) Dented by Softer PMI Reading
The US Dollar (USD) initially trended higher on Thursday, with the safe-haven currency catching bids amidst a slump in market risk appetite.
However, the ‘Greenback’ then shed a good portion of these gains overnight, after the latest ISM non-manufacturing PMI reported growth in the US service sector dropped to an 11-month low last month.
Today, employment data is likely to drive movement in US Dollar exchange rates. Will another disappointing US payroll reading push the US Dollar lower?
Canadian Dollar (CAD) Sinks on WTI Headwinds
The Canadian Dollar (CAD) came under pressure yesterday as WTI crude oil prices record the heaviest daily fall in over a week. Exerting additional downside, cautious trading sentiment subdued risk-on currencies.
The ‘Loonie’ may extend its losses today, as unemployment is expected to have risen in January.
New Zealand Dollar (NZD) Firms despite Risk-Off Mood
The New Zealand Dollar (NZD) enjoyed tailwinds yesterday despite risk-off headwinds. The Reserve Bank of New Zealand (RBNZ) is expected to hike interest by 25 bps later this month, lending support to the currency.
Data Releases
Feb 4th 10:30 AUD RBA Statement on Monetary Policy N/A
Feb 4th 17:00 EUR German Factory Orders (Dec) 0.5%
Feb 4th 18:30 EUR Construction PMI (Jan) 53.6
Feb 4th 18:30 EUR German Construction PMI (Jan) 49.5
Feb 4th 19:30 GBP Construction PMI (Jan) 54.3
Feb 4th 20:00 EUR Retail Sales (Dec) -0.5%
Feb 4th 23:30 CAD Unemployment Rate (Jan) 6.2%
Feb 4th 23:30 CAD Employment Change (Jan) -117.5K
Feb 4th 23:30 USD Unemployment Rate (Jan) 3.9%
Feb 4th 23:30 USD Non-farm Payrolls (Jan) 150K
Feb 5th 01:00 CAD Ivey PMI (Jan) 50