Australian Dollar (AUD) loses ground despite impressive trade data
Yesterday, the Australian Dollar (AUD) sprinted out of the gates following forecast-beating trade data. In November, Australia’s trade surplus expanded to AU$11.44bn, significantly beyond expectations.
However, the risk-sensitive ‘Aussie’ relinquished its gains overnight as the market mood darkened following the latest US inflation data.
Today, AUD may endure volatile trade as investors digest China’s latest inflation release. Could ongoing Chinese deflation dent the Australian Dollar?
New Zealand Dollar (NZD) stumbles as bearish trade clouds markets
The New Zealand Dollar (NZD) initially recovered from recent lows yesterday thanks to an improving market mood.
However, sentiment then soured amid fears of stubborn inflation in the US, leading NZD to erase all its previous gains.
New Zealand data remains hard to come by today, which may limit NZD’s appeal to investors.
Pound (GBP) quiet amid lack of data releases
Muted trade continued to drag on the Pound (GBP) yesterday, as the UK data drought remained in effect.
Additionally, forecasts that UK inflation will fall to 2% by April exerted additional pressure on Sterling, sparking bets on coming interest rate cuts from the Bank of England (BoE).
This evening, the latest UK GDP data is due for release. The British economy is expected to have grown in November by 0.2%, which could lift GBP exchange rates.
Euro (EUR) recovers following ECB economic bulletin
The Euro (EUR) initially struggled yesterday as the safer currency failed to attract bids amid a risk-on market mood.
EUR then recovered during European trade following the European Central Bank’s (ECB) economic bulletin, which underlined the bank’s assertion that it was not yet considering cutting interest rates.
Tonight, ECB Chief Economist Philip Lane is due to speak. If he reiterates this approach, the common currency could strengthen.
US Dollar (USD) gains ground as inflation rises
Hotter-than-expected inflation data strengthened the US Dollar (USD) against its rivals yesterday.
Headline inflation increased from 3.1% to 3.4% in December, above forecasts of a rise to 3.2%. This prompted investors to pare back their bets on a March rate cut from the Federal Reserve, sending USD sharply higher.
Tonight, the latest US PPI data is due to print. If PPI increased in December, as expected, it may further dent rate cut bets and boost the ‘Greenback’.
Canadian Dollar (CAD) wavers despite rising oil prices
The Canadian Dollar (CAD) struggled to capitalise on a rise in oil prices yesterday, with CAD only posting gains against its weakest rivals.
Crude prices may remain the primary driver of movement for the ‘Loonie’ again today, due to a light data calendar.
Data Releases
Jan 12th 17:00 GBP GDP (Nov) 0.2%
Jan 12th 22:30 EUR ECB Lane Speech
Jan 12th 23:30 USD PPI (Dec) 0.1%