Australian Dollar (AUD) Falls on RBA Headwinds
The Australian Dollar (AUD) tumbled against several peers at the end of last week as a lack of significant data left the ‘Aussie’ exposed to headwinds.
Reserve Bank of Australia (RBA) Governor Philip Lowe gave a fairly dovish speech on Friday morning, indicating the bank will wait for evidence that inflation has picked up in a sustainable way before taking further policy tightening action.
Into this week, a lack of AU data at the start of the session means the Australian Dollar will likely trade on external factors – if RBA messaging remains dovish, the ‘Aussie’ could come under further pressure.
Pound (GBP) Buoyed as GDP Reveals 7.5% Growth
The Pound (GBP) climbed overall on Friday as UK GDP data revealed the strongest economic expansion since the 1940s.
UK GDP grew by 7.5% over the course of 2021 – the fastest growth among any of the G7 countries. Nevertheless, gains were capped as economists pointed out that the economy rebounded from a particularly low base in 2020.
A lack of GBP data leaves the Pound to trade on political dynamics today. If Prime Minister Boris Johnson faces more pressure to resign, Sterling sentiment may take a hit.
Euro (EUR) Turns Down Following Waning German Inflation
The Euro (EUR) weakened against its peers at the end of last week as German inflation decreased, easing pressure on the European Central Bank (ECB) to tighten monetary policy.
Friday’s data confirmed the first downturn in Germany’s CPI for seven months, as prices of services and food decreased. Energy prices continued to surge, however, inspiring hopes that corrective action may still be necessary.
A speech from ECB President Christine Lagarde could affect EUR exchange rates today – if Lagarde discounts a 2022 interest rate hike, the Euro may soften.
US Dollar (USD) Faces Pressure on Weakening Consumer Morale
The US Dollar (USD) fell through the latter half of Friday’s European session, as preliminary Michigan consumer sentiment data revealed that consumers lowered their expectations in February.
The data from the University of Michigan fell sharply for a second straight month to 61.7, rather than rising to 67.5 as anticipated. Losses were capped, however, by bullish bets for successive interest rate hikes from the Federal Reserve.
The US Dollar may come under pressure today given a lack of economic data; alternately, a risk-off market mood could buoy the ‘Greenback’.
Canadian Dollar (CAD) Rises as Crude Oil Prices Climb
The Canadian Dollar (CAD) firmed at the end of last week, as strengthening oil prices supported the currency. Increasing demand drove the price of crude oil up, as supply was limited by a shortfall in production.
New Zealand Dollar (NZD) Supported Despite PMI Miss
The New Zealand Dollar (NZD) trended up through Friday’s session, even though NZ business activity fell in January rather than lifting as expected.
A reasonably upbeat market mood helped to protect the risk-on ‘Kiwi’ against significant losses.
Data Releases
Feb 15th 02:15 EUR ECB President Lagarde Speech N/A