Australian Dollar (AUD) Recovers from USD-Inspired Downside
The Australian Dollar (AUD) tumbled yesterday afternoon in response to high US inflation data.
Increasing price pressures in the world’s largest economy subdued trading sentiment, weighing upon risk-sensitive currencies. AUD subsequently recovered, however, as risk appetite improved.
A speech from Reserve Bank of Australia (RBA) Governor Philip Lowe may influence ‘Aussie’ trading this morning. RBA policymakers have been dovish in recent messaging, and Lowe could inspire losses if he maintains this tone.
Pound (GBP) Firms Overall despite International and Domestic Pressures
The Pound (GBP) traded in a mixed range yesterday morning as economic and political headwinds weighed upon the currency.
The cost of living crisis deepened as Unilever projected further price increases across consumer goods, while tensions mounted between Russia and the UK. Russian diplomat Sergei Lavrov said British-Russian relations had reached their ‘lowest point in years.’
UK GDP is likely to drive movement in the Pound today. If the UK economy expanded as expected through the final quarter of 2021, Sterling may enjoy further tailwinds.
Euro (EUR) Trades Mixed Following US Data Release
The Euro (EUR) fluctuated against its peers on Thursday as hawkish comments from European Central Bank (ECB) policymaker Luis de Guindos were overshadowed by upside in the US Dollar.
The ECB’s Vice President said that the wage-bargaining process in the Eurozone may have been postponed, adding ‘if we start to see second-round effects… monetary policy will have to respond.’
Amidst a lack of additional trading impetus, the Euro firmed against several peers – but subsequently came under pressure as USD upside dampened EUR sentiment.
Into today, Germany’s finalised CPI figures are expected to confirm inflation fell in January – if the data confirms this, the single currency may face headwinds on reduced pressure for the ECB to tighten monetary policy.
US Dollar (USD) Climbs as Inflation Reaches 7.5%
The US Dollar (USD) rose yesterday afternoon as annualised CPI data revealed that consumer inflation rose to 7.5% in January 2022, surpassing expectations of 7.3%.
Energy remained the biggest contributor, followed by the cost of shelter, food, new vehicles, used vehicles and medical care services. The data had a positive effect on the ‘Greenback’, as investors speculated the Federal Reserve may tighten monetary policy more aggressively going forward.
February’s preliminary Michigan consumer sentiment index may affect USD trading today – morale is expected to have improved, potentially lending support.
Canadian Dollar (CAD) Wavers Despite Oil Price Rally
The Canadian Dollar (CAD) sank against several peers on Thursday, with the commodity-linked currency unable to draw support in spite of a sharp uptick in oil prices.
New Zealand Dollar (NZD) Resists Major Downside
The New Zealand Dollar (NZD) dipped in the wake of US inflation data, subsequently rebounding on optimistic expectations for today’s business PMI.
Data Releases
Feb 11th 08:30 AUD RBA Lowe Speech N/A
Feb 11th 17:00 EUR German Inflation Rate Final (Jan) 4.9%
Feb 11th 17:00 GBP GDP Growth Rate Prelim (Q4) 1.1%
Feb 11th 17:00 GBP Industrial Production (Dec) 0.1%
Feb 12th 01:00 USD Michigan Consumer Sentiment Prelim (Feb) 67.5
Feb 12th 01:00 USD Fed Monetary Policy Report N/A