Australian Dollar (AUD) Drops amid Mixed RBA Bets
The Australian Dollar (AUD) slipped on Tuesday. A rise in business confidence pointed to easing inflationary pressures, which reduced expectations of further rate hikes from the Reserve Bank of Australia (RBA).
Mixed PMI figures also weighed on the ‘Aussie’ yesterday. Private sector output contracted gain in January, further undermining RBA rate hike bets.
The latest inflation data could push AUD higher today if price growth accelerated in the fourth quarter as forecast. The figures could reverse expectations for future RBA rate hikes.
New Zealand Dollar (NZD) Muted Ahead of Inflation Data
The New Zealand Dollar (NZD) moved little against its peers on Tuesday. Bets on the ‘Kiwi’ were subdued ahead of key inflation data.
Today’s consumer price index is expected to report a slowing of inflation in the fourth quarter. If the data prints as forecast, it could pull NZD lower.
Pound (GBP) Falls as Service Sector Weakens
The Pound (GBP) dropped on Tuesday after a range of disappointing data releases. A drastic slump in service sector output in January pulled Sterling lower.
Deeper losses were limited by persistent bets on a 50bps rate hike from the Bank of England (BoE), however.
With no significant data today, movement in Sterling is likely to be driven by BoE rate hike bets and domestic headwinds.
Euro (EUR) Rises amid Service Sector Growth and Hawkish ECB
The Euro (EUR) climbed on Tuesday. January PMI figures indicating a return to growth for the Eurozone’s private sector boosted EUR.
Hawkish signals from European Central Bank (ECB) officials also bolstered the Euro yesterday.
Looking to today, A forecast rise in German business confidence in January could help to boost the Euro.
US Dollar (USD) Climbs amid Risk-Off Mood
The US Dollar (USD) was bolstered by a cautious market mood on Tuesday. The safe-haven ‘Greenback’ also found support from better-than-expected PMI figures.
On the other hand, USD saw its gains capped by expectations of a slower pace of policy tightening from the Federal Reserve.
In the absence of any notable US data, movement in the ‘Greenback’ is likely to be driven by Fed rate hike bets and any shifts in market mood.
Canadian Dollar (CAD) Subdued as Oil Prices Remain Steady
The Canadian Dollar (CAD) saw muted trading on Tuesday. Crude oil prices held steady yesterday, meaning that the ‘Loonie’ traded with no clear direction.
The Bank of Canada’s (BoC) interest rate decision will be in focus today. A 25bps rate hike from the bank could weaken the ‘Loonie’ if this is seen as a sign the BoC is nearing the end of its tightening cycle.
Data Releases
Jan 25th 01:00 NZD Inflation Rate (Q4) 7.1%
Jan 25th 10:30 AUD Inflation Rate (Q4) 7.5%
Jan 25th 19:00 EUR German Ifo Business Climate (Jan) 90.2
Jan 26th 01:00 CAD BoC Interest Rate Decision 4.5%
Jan 25th 02:00 CAD Boc Gov Macklem Speech