Australian dollar (AUD) slides as sentiment sours
The Australian dollar (AUD) initially managed to hold steady through yesterday’s trading session, supported by a relatively stable market mood.
However, the ‘Aussie’ came under notable selling pressure overnight as a shift in investor sentiment in the wake of the latest US inflation figures sapped demand for risk-sensitive assets.
In the absence of any notable domestic data, movement in the Australian dollar is likely to remain tied to market risk dynamics today.
New Zealand dollar (NZD) tumbles in risk-off trade
Movement in the New Zealand dollar (NZD) largely tracked that of the ‘Aussie’ on Wednesday, with NZD exchange rates falling sharply as market risk appetite evaporated.
If investors remain cautious today, expect the ‘kiwi’ to remain on the defensive.
Pound (GBP) dented by UK economic concerns
The pound (GBP) came under pressure through yesterday’s session amid ongoing concerns over the UK’s economic trajectory.
Despite upbeat new growth forecasts from the National Institute of Economic and Social Research (NIESR), Sterling shrugged to shake off the general malaise currently surrounding the UK’s economic outlook.
Today sees the publication of the UK’s latest GDP figures, with the pound poised to fall if they report growth contracted in the last quarter of 2024 as forecast.
Euro (EUR) buoyed by gloomy sentiment
The euro (EUR) trended broadly higher on Wednesday, with the safe-haven currency benefitting from a deteriorating market mood.
However, the upside in EUR exchange rates was kept in check by the single currency’s negative correlation with the US dollar (USD).
The Eurozone will publish its latest industrial production figures later today. Economists forecast factory output will have contracted in December, which may act as a headwind for the euro.
US dollar (USD) jumps as US inflation accelerates
The US dollar surged on Wednesday, in response to stronger-than-expected US headline and core inflation figures.
January’s surprisingly strong inflation print propelled USD exchange rates sharply higher as it triggered another trimming of Federal Reserve interest rate cut bets.
Coming up, the release of the latest US producer price inflation figures could extend the US dollar’s gains today, if January’s data points to another rise in underlying inflationary pressures.
Canadian dollar (CAD) undermined by tariff concerns
The Canadian dollar (CAD) struggled through yesterday’s trading session as CAD sentiment continued to be undermined by the threat posed by Donald Trump’s new metal tariffs.
The recent downturn in oil prices coupled with continued tariff jitters may keep the ‘loonie’ on the back foot today.
Data releases
17:00 GBP GDP (Q4)
20:00 EUR Industrial Production (Dec)
23:30 USD PPI (Jan)