Australian Dollar (AUD) Struggles amid Cautious Trade
Monday saw the Australian Dollar (AUD) weaken as worries about China’s economy dented the risk-sensitive currency.
China’s latest consumer price index – released over the weekend – showed that prices fell 0.5% year on year in November. With the Chinese economy falling further into deflation, anxious traders shunned the ‘Aussie’.
Turing to today, AUD could see choppy trade as investors analyse this morning’s consumer and business confidence releases.
New Zealand Dollar (NZD) Recovers despite Chinese Deflation Fears
The New Zealand Dollar (NZD) also initially slipped this week as Chinese deflation anxieties flared. This weighed on the ‘Kiwi’ due to New Zealand’s close trading ties to the economic superpower.
However, NZD managed to regain ground during European trade, without a clear catalyst for the movement.
Data remains in short supply for NZD today, which may stifle the currency’s appeal.
Pound (GBP) Rises amid Hawkish BoE Speculation
The Pound (GBP) managed to strengthen over the course of Monday’s session, as investors bet on a hawkish hold from the Bank of England (BoE).
Inflation remains more persistent in the UK than in other key economies, leading investors to expect the BoE to keep interest rates high for much longer than its counterparts. As a result, Sterling was able to rise.
The latest UK labour data is due to print this evening. With expectations of cooling wage growth and rising unemployment, the Pound could struggle to attract support.
Euro (EUR) Undermined by ECB Rate Cut Bets
Mixed trade affected the Euro (EUR) yesterday, as investors looked ahead to the European Central Bank’s (ECB) incoming rate decision.
In the Eurozone, inflation has cooled rapidly in recent months and is now approaching the ECB’s target of 2%. With this in mind, investors believe the bank may cut rates soon, which weighed on EUR.
The latest German ZEW economic sentiment index for December is due this evening. If investor optimism slips as expected, the Euro could fall.
US Dollar (USD) Fluctuates as Markets Await Inflation Data
The US Dollar (USD) got off to a mixed start this week, as investors look ahead to more impactful data.
The Federal Reserve is due to announce its latest interest rate decision this week, which stoked caution amongst USD investors. With the path forward uncertain, investors remained hesitant.
Tonight, the latest US inflation data is released. While a cooldown in headline inflation is forecast, November’s core inflation rate is expected to hold steady. This may boost USD by paring back rate cut bets.
Canadian Dollar (CAD) Stumbles as Oil Prices Fall
Oil prices slipped on Monday, which served to sap sentiment towards the crude-linked Canadian Dollar (CAD).
Oil price dynamics are likely to remain the main driver of movement for the ‘Loonie’ today, in lieu of other data.
Data Releases
Dec 12th 09:30 AUD Westpac Consumer Confidence Index (Dec) 82.3
Dec 12th 10:30 AUD NAB Business Confidence (Nov) -1
Dec 12th 17:00 GBP Unemployment Rate (Oct) 4.3%
Dec 12th 17:00 GBP Average Earnings (Oct) 7.4%
Dec 12th 20:00 EUR DE ZEW Economic Sentiment Index (Dec) 8.8
Dec 12th 23:30 USD Inflation Rate (Nov) 3.1%