Australian Dollar (AUD) Drops as Industrial Sector Contracts
After an initial upside, the Australian Dollar (AUD) came under pressure on Wednesday. Evidence of a contraction in the country’s industrial sector pulled the ‘Aussie’ lower.
In addition, declining commodities prices dented the resource-linked currency.
Looking ahead, the ‘Aussie’ will see no data releases today. Therefore, the currency’s movements may be driven by any shifts in risk appetite.
New Zealand Dollar (NZD) Slips alongside AUD
The New Zealand Dollar (NZD) also initially edged higher on Wednesday as the risk-sensitive ‘Kiwi’ was boosted by an upbeat market mood.
However, thin trading conditions and NZD’s positive correlation with AUD saw the New Zealand Dollar relinquish its gains in the evening.
NZD data is still in short supply today, meaning that risk sentiment could continue to drive the currency.
Pound (GBP) Climbs as UK Forecasts Improve
The Pound (GBP) was boosted yesterday by optimistic forecasts for the UK economy. A report by the National Institute for Economic and Social Research (NIESR) stated that the UK would ‘likely avoid’ a recession in 2023.
However, the report also said that the UK still faces multiple economic challenges, which limited Sterling’s gains.
Amid a lack of macroeconomic data today, the Pound could trade without a clear directional bias.
Euro (EUR) Directionless amid Lack of Data
The Euro (EUR) was mixed yesterday as a lack of Eurozone economic data left the common currency without a clear trajectory.
Bets on further interest rate hikes from the European Central Bank (ECB) prevented drastic losses for the Euro, however.
Looking to today, a forecast uptick in German inflation could bolster EUR. The data could prompt further ECB interest rate hike bets.
US Dollar (USD) Recovers following Hawkish Fed Comments
The US Dollar (USD) initially fell on Wednesday. Comments from Federal Reserve Chair Jerome Powell on Tuesday pointing to cooling inflation continued to weigh on USD. A risk-on mood deepened losses for the ‘Greenback’.
However, USD was later supported by more hawkish comments from other Fed policymakers. Speaking on Wednesday, Fed board member John Williams signalled that the central bank would push ahead with further rate hikes.
Today’s jobless claims figures could push USD higher if they remain close to last week’s lows, indicating a tight labour market and possibly boosting rate rise bets.
Canadian Dollar (CAD) Drops despite Oil Price Recovery
The crude-linked Canadian Dollar (CAD) slipped on Wednesday, despite a rise in oil prices, without a clear catalyst for the movement.
With no data today, the ‘Loonie’ will likely be affected by any shifts in oil prices.
Data Calendar
Feb 9th 17:00 EUR German Inflation Rate (Jan) 8.9%
Feb 9th 23:30 USD Initial Jobless Claims (4/Feb) 190,000