Australian Dollar (AUD) firms on China stimulus speculation
The Australian Dollar (AUD) trended broadly higher during yesterday’s session after a New Years speech from Chinese President Xi Jinping, bolstered hopes for fresh stimulus measures from China.
However, these gains remained limited in scope as a bearish market mood capped the ‘Aussie’s upside potential.
In the absence of any notable domestic data, AUD exchange rates are likely to remain sensitive to risk appetite today. Could a rebound in sentiment help to propel the Australian Dollar higher?
New Zealand Dollar (NZD) slips in risk-off trade
The New Zealand Dollar (NZD) was mostly muted on Tuesday as a cautious market mood saw investors steer clear of the risk-sensitive ‘Kiwi’.
With NZD data still in short supply, movement in the New Zealand Dollar is likely to remain tied to market sentiment today.
Pound (GBP) knocked by weak manufacturing PMI
The Pound (GBP) stumbled during yesterday’s session in the wake of the latest UK manufacturing PMI.
December’s finalised figures reported growth in the UK factory was actually a little weaker than initially thought, which did little to ease UK recession fears.
Looking ahead, the Pound’s upside potential looks limited, as UK recession fears are likely to continue to stoke Bank of England (BoE) interest rate cut speculation.
Euro (EUR) undermined by USD strength
Trade in the Euro (EUR) was mixed on Tuesday. The single currency faced headwinds as a result of its strong negative correlation with the US Dollar (USD).
However, an upwardly revised Eurozone manufacturing PMI offered some modest support to EUR exchange rates.
Coming up, the release of Germany’s latest jobs report could drag on the Euro later this evening, if December’s figures report another rise in unemployment.
US Dollar (USD) surges in bearish trade
The US Dollar got off to a roaring start this year as a cautious mood saw skittish investors favour the safe-haven currency.
These gains were reinforced by a sharp uptick in US Treasury yields, in advance of some high-impact US data releases later in the week.
The focus for USD investors will now turn to the publication of the minutes from the Federal Reserve’s latest policy meeting. Expect to see the US Dollar plummet in overnight trade, if the minutes show that Fed policymakers are open to rate cuts in the near future.
Canadian Dollar (CAD) buoyed by rising oil prices
The commodity-linked Canadian Dollar (CAD) rose in tandem with oil prices on Tuesday, amid concern over attacks on vessels in the Red Sea.
If oil prices continue to rise, the ‘Loonie’ may extend these gains through today’s session.
Data Releases
Jan 3rd 18:55 EUR German Unemployment Rate (Dec) 5.9%
Jan 4th 01:00 USD ISM Manufacturing PMI (Dec) 47.1
Dec 21st 23:30 USD GDP (Q3) 5.2%