Australian Dollar (AUD) Climbs after Above-Forecast Inflation Rise
The Australian Dollar (AUD) climbed yesterday after fourth quarter inflation rose by more than forecast. The figures inspired bets on further interest rate hikes from the Reserve Bank of Australia (RBA).
AUD found further support amid reports from China that Covid cases have fallen by around 70% in recent weeks.
Movement in the risk-sensitive ‘Aussie’ today is likely to be driven by changes in market mood and RBA rate hike bets.
New Zealand Dollar (NZD) Drops as Cooler Inflation Points to Slower RBNZ Tightening
The New Zealand Dollar (NZD) tumbled on Wednesday. The ‘Kiwi’ was pulled lower by cooler fourth quarter inflation.
The data prompted traders to rein in bets on further Reserve Bank of New Zealand (RBNZ) rate hikes.
With no significant data today, NZD is likely to be affected by risk appetite shifts.
Pound (GBP) Rallies amid BoE Rate Hike Bets
The Pound (GBP) climbed against its peers on Wednesday. Sterling found sustained support from Bank of England (BoE) rate hike bets.
Reports that the Office for Budget Responsibility (OBR) is set to downgrade its 2023 growth forecasts capped GBP’s gains, however.
Looking ahead, the Confederation of British Industry’s (CBI) distributive trades survey could hurt the Pound if it shows a decline in sales, as expected.
Euro (EUR) Falls amid Fears of Escalation in Russia-Ukraine Conflict
The Euro (EUR) slipped against many of its rivals yesterday. EUR came under pressure after Germany announced it would be providing tanks to Ukrainian forces, which sparked fears that the conflict could escalate further.
On the other hand, the Euro saw losses limited by hawkish signals from the European Central Bank (ECB).
Looking to today, there are no significant data releases for the Euro. The single currency could be affected by news concerning the Russia-Ukraine conflict.
US Dollar (USD) Pulled Lower by Bets on Softer Fed Action
The US Dollar (USD) trended lower against its peers on Wednesday. Expectations of a slower pace of policy tightening from the Federal Reserve continued to dent confidence in USD.
The safe-haven ‘Greenback’ found support from a cautious market mood, however.
A forecast slowdown in fourth quarter GDP growth could prompt losses in the US Dollar today. On the other hand, an expected recovery in durable goods orders could bolster USD.
Canadian Dollar (CAD) Drops following BoC Interest Rate Decision
The Canadian Dollar (CAD) slipped on Wednesday after the Bank of Canada (BoC) hiked interest rates by 25bps as forecast, but announced that it will likely pause its tightening cycle.
With no data releases today, the oil-linked ‘Loonie’ is likely to be affected by any shifts in crude prices.
Data Calendar
Jan 26th 10:30 GBP CBI Distributive Trades (Jan) -5
Jan 26th 23:30 USD Durable Goods Orders (Dec) 2.5%
Jan 26th 23:30 USD GDP Growth Rate (Q4) 2.6%
Jan 26th 10:30 USD Initial Jobless Claims (Jan/21) 205,000