Australian Dollar (AUD) Pushed Higher by Return of Risk Appetite
The Australian Dollar (AUD) was bolstered by a risk-on mood on Wednesday. The ‘Aussie’ also found support from the prospect of further economic stimulus from the Chinese government.
AUD saw its gains capped by a continued rise in China’s Covid case levels, however.
Looking ahead, December’s unemployment rate could prompt gains in the ‘Aussie’ if it remains at a half-century low of 3.4% as forecast.
New Zealand Dollar (NZD) Climbs as Markets Bet on Further RBNZ Rate Hikes
The New Zealand Dollar (NZD) leaped yesterday as the ‘Kiwi’ found support from a return of risk appetite.
Expectations for further interest rate hikes from the Reserve Bank of New Zealand (RBNZ) also boosted the New Zealand Dollar.
NZD will see no major data releases today, meaning that the currency is set to be affected by any shifts in risk appetite.
Pound (GBP) Rises amid Increased BoE Rate Rise Bets
The Pound (GBP) climbed on Wednesday as UK inflation remained in double digits, though it did cool slightly. Meanwhile, core inflation unexpectedly held steady.
With inflation proving persistently high, markets increased their expectations for another 50bps rate hike from the Bank of England (BoE).
Amid a lack of data today, GBP could see movement from BoE rate hike bets and the prospect of further strike action.
Euro (EUR) Slips as Eurozone Inflation Eases
The Euro (EUR) slipped against most of its peers yesterday. A risk-on mood weighed on EUR, as well as confirmation that Eurozone inflation cooled in December.
Hawkish comments from European Central Bank (ECB) policymakers lent support to EUR, however, while weakness in the US Dollar (USD) also shored up EUR exchange rates.
A speech from ECB President Christine Lagarde could help the Euro to recover today if she hints at further interest rate hikes. The ECB’s December meeting minutes may similarly support the Euro.
US Dollar (USD) Drops amid Downbeat Data
The US Dollar fell sharply on Wednesday after disappointing domestic data. Retail sales fell by more than forecast in December alongside an above-forecast drop in PPI. Easing inflation and a weaker economy could lead to fewer Federal Reserve rate hikes.
A risk-on mood also weighed on the safe-haven ‘Greenback’ yesterday.
Looking to today, jobless claims figures are forecast to remain close to previous levels which could boost USD.
Canadian Dollar (CAD) Slumps as December’s PPI Falls More than Forecast
The Canadian Dollar (CAD) was pulled lower by a drop in December’s PPI yesterday. CAD’s positive correlation to USD added to its downside.
With no significant data today, movement in the crude-linked ‘Loonie’ will likely be driven by any shifts in oil prices.
Data Calendar
Jan 19th 08:00 USD Fed Logan Speech
Jan 19th 10:30 AUD Unemployment Rate (Dec) 3.4%
Jan 19th 20:30 EUR ECB President Lagarde Speech
Jan 19th 22:30 EUR ECB Monetary Policy Meeting Accounts
Jan 19th 23:30 USD Initial Jobless Claims (Jan/14) 214,000