Australian dollar (AUD) slips as business confidence remains negative
The Australian dollar (AUD) softened yesterday after Australia’s business confidence index missed forecasts.
December’s reading printed in negative territory for the second consecutive month, rather than recovering as expected.
Australia’s latest inflation reading could dent AUD this morning, if an expected cooling of inflation in the fourth quarter fuels Reserve Bank of Australia (RBA) interest rate cut bets.
New Zealand dollar (NZD) stumbles amid risk-off mood
The New Zealand dollar (NZD) also weakened during yesterday’s session as a souring market mood weighed on the risk-sensitive ‘kiwi.
Economic data from New Zealand is absent from the calendar today. As a result, market risk dynamics could drive NZD movement.
Pound (GBP) mixed in absence of data
The pound (GBP) moved without a clear direction yesterday as a lack of British economic data left the currency rudderless.
Meanwhile, a souring mood saw GBP soften slightly against some of its safer peers while holding strong against riskier rivals.
UK data is in short supply today, potentially muting the pound once again. However, Bank of England (BoE) Governor Andrew Bailey will testify in front of the UK Treasury committee overnight. Any policy hints could impact GBP.
Euro (EUR) struggles amid USD strength
The euro (EUR) faced some pressure yesterday as EUR suffered from its negative correlation with a stronger US dollar (USD).
However, a cautious market mood helped the safer euro resist losses against its more risk-sensitive peers.
Turning to today, Germany’s latest consumer confidence report is in focus. If consumers in the Eurozone’s largest economy remained pessimistic heading into February, EUR could decline.
US dollar (USD) rises on fresh tariff fears
The US dollar climbed yesterday as Donald Trump sparked fresh trade war fears in markets.
Trump said that he wants to impose universal tariffs on goods coming into the US that are ‘much bigger’ than 2.5%. This spooked markets, providing USD with safe-haven flows.
Movement in the US dollar may be muted today amid a lack of US data ahead of the Federal Reserve interest rate decision tomorrow morning.
Canadian dollar (CAD) buoyed by rising oil
The crude-linked Canadian dollar (CAD) firmed yesterday thanks to rising oil prices and CAD’s positive correlation with USD.
With Canadian data still thin on the ground today, USD and oil price dynamics may influence the ‘loonie’. Overnight, an expected rate cut from the Bank of Canada (BoC) could see CAD stumble.
Data releases
10:30 AUD Inflation Rate (Q4)
17:00 EUR German GfK Consumer Confidence (Feb)
00:15 GBP BoE Bailey Speech
00:45 CAD BoC Interest Rate Decision