Australian dollar (AUD) jumps on USD weakness
The Australian dollar (AUD) initially struggled yesterday as a lull in domestic data left the currency without direction.
However, the ‘Aussie’ then surged in overnight trade as a pullback in the US dollar (USD) bolstered market risk appetite.
Australia will publish its latest jobs report later this morning. Economists forecast that unemployment rose in December. Will this stoke bets for an interest rate cut from the Reserve Bank of Australia (RBA) in the near future and drag on AUD exchange rates?
New Zealand dollar (NZD) rallies amid improving mood
After a muted start, the New Zealand dollar (NZD) jumped on Wednesday, following a sharp improvement in market risk appetite.
NZD data remains thin on the ground today, likely leaving movement in the ‘kiwi’ to be tied to market risk dynamics. If sentiment remains upbeat, the New Zealand dollar may strengthen.
Pound (GBP) firms on inflation relief
The pound (GBP) rallied during yesterday’s session as GBP investors welcomed a surprise slowdown in UK inflation last month.
The fall in inflation boosts bets the Bank of England (BoE) may cut interest rates next month, which in turn should help to lower UK government borrowing costs.
Coming up, Sterling may build on these gains today, if the UK’s latest GDP figures report the economy returned to growth in November.
Euro (EUR) slides as German economy contracts
The euro (EUR) trended broadly lower on Wednesday. Initial pressure on the single currency followed the release of Germany’s 2024 GDP data, which revealed the Eurozone’s largest economy shrank for the second year in a row.
These losses were then reinforced after European Central Bank (ECB) policymaker Francois Villeroy de Galhau said that it would make sense for interest rates to ‘reach 2% by the summer.’
Today sees the publication of Germany’s finalised CPI figures. However, barring a revision to December’s preliminary figures, their impact on the euro may be negligible.
US dollar (USD) slides as US core inflation cools
The US dollar retreated on Wednesday in the wake of the latest US inflation print. While December’s CPI figures reported headline inflation accelerated from 2.7% to 2.9% as forecast, core inflation unexpectedly slowed to 3.2%.
This dragged on the US dollar amid suggestions that USD investors may have been a little hasty in pricing out a Federal Reserve interest rate cut this year.
Looking ahead, the US will publish its latest retail sales figures later today. If sales growth slowed in December, it may place additional pressure on the ‘greenback’.
Canadian dollar (CAD) falters despite rising oil prices
The Canadian dollar (CAD) stumbled yesterday, as the currency was undermined by its positive relationship with the US dollar.
While Canadian data is in short supply today, a continued uptick in oil prices may offer some support to the ‘loonie’.
Data Releases
10:30 AUD Unemployment Rate (Dec)
17:00 EUR German Inflation Rate (Dec)
17:00 GBP GDP (Nov)
23:30 USD Retail Sales (Dec)