Australian Dollar (AUD) climbs amid hawkish RBA minutes
Following hawkish meeting minutes from the Reserve Bank of Australia (RBA), the Australian Dollar (AUD) gathered strength yesterday.
The minutes showed that the RBA considered hiking interest rates at its previous meeting, and that policymakers think inflation will prove persistent. As a result, investors bet on a possible final rate hike, strengthening the ‘Aussie’.
Today, the Australian Dollar may struggle to find its feet due to a lack of pertinent data.
New Zealand Dollar (NZD) ticks higher amid upbeat economic news
The New Zealand Dollar (NZD) firmed on Tuesday, amid a duo of forecast-beating economic releases.
The New Zealand trade deficit shrank more than expected in November, and business confidence improved above expectations. Due to these positive signs for the country’s economy, the ‘Kiwi’ managed to earn support.
This morning’s ANZ consumer confidence data could continue to impact NZD today. Otherwise, the market mood may drive the risk-sensitive currency.
Pound (GBP) floats on cheery trade
Due to a bullish market impulse, the increasingly risk-sensitive Pound (GBP) managed to strengthen on Tuesday.
However, GBP’s gains were limited by a downbeat analysis of the UK economy. Bond fund giant Pimco suggested a hard landing was on the cards, capping Sterling’s gains.
The latest UK inflation data is due to print this evening. Both the headline and core readings are expected to have decelerated, which may weaken Sterling.
Euro (EUR) supported by USD weakness
The Euro (EUR) managed to gain ground during Tuesday’s session, with the currency enjoying its strong negative correlation with a weakening US Dollar (USD).
However, dovish comments from European Central Bank (ECB) policymaker Francois Villeroy de Galhau may have limited EUR’s strength. Villeroy indicated that interest rates would be cut in 2024, which renewed rate cut bets and capped EUR.
This evening, the latest German GfK consumer confidence index is to be published. Economists forecast a minor improvement in January’s reading, which could support EUR.
US Dollar (USD) slides amid risk-on trade
Due to a lull in data releases, the US Dollar was left exposed to elevated levels of risk appetite on Tuesday, with traders shunning the safe-haven ‘Greenback’.
In addition, ongoing bets on a Federal Reserve rate cut in March weighed on USD.
Fed official Austan Goolsbee is due to speak this morning. If he convincingly pushes back against interest rate cuts, USD could strengthen.
Canadian Dollar (CAD) unable to capitalise on hot inflation print
Hotter-than-expected inflation data failed to support the Canadian Dollar (CAD) on Tuesday, as a languishing US Dollar restricted its movement.
Oil prices are likely to be the main driver of movement for the crude-linked ‘Loonie’ today, amidst a light data calendar. If oil firms amid supply fears, CAD could climb.
Data Releases
Dec 20th 07:00 NZD ANZ Roy Morgan Consumer Confidence (Dec) 89
Dec 20th 09:00 USD Fed Goolsbee Speech
Dec 20th 17:00 EUR DE GfK Consumer Confidence (Jan) -27
Dec 20th 17:00 GBP Inflation Rate (Nov) 4.4%