Australian dollar (AUD) bounces back as RBA downplays further cuts
After weakening ahead of the Reserve Bank of Australia’s (RBA) interest rate decision, the Australian dollar (AUD) then rebounded on Tuesday.
The RBA cut interest rates, as expected, but Governor Michele Bullock said that this ‘does not imply that further rate cuts along the lines suggested by the market are coming’.
Looking forward, a lack of market-moving economic data today could see AUD trade on risk appetite.
New Zealand dollar (NZD) slides amid souring market mood
The New Zealand dollar (NZD) took a tumble yesterday as a risk-averse mood in markets weighed on the ‘kiwi’.
Today, the Reserve Bank of New Zealand (RBNZ) will announce its latest policy decision. An expected 50bps rate cut could dent NZD, although investors may focus on the bank’s forward guidance for fresh impetus.
Pound (GBP) choppy following jobs data and BoE comments
The pound (GBP) fluctuated yesterday as Bank of England (BoE) Governor Andrew Bailey brushed off some strong UK jobs data.
While wage growth accelerated to an eight-month high in the three months to December, Bailey said this did not change the broader picture on the UK economy and warned of a ‘weak growth environment’.
Turning to today, the pound could potentially test multi-month highs following the UK’s consumer price index this evening. An expected jump in inflation in January could dampen BoE rate cut bets.
Euro (EUR) slips despite upbeat German data
The euro (EUR) weakened yesterday, despite a larger-than-forecast improvement in Germany’s latest ZEW economic sentiment index.
A recovery in the US dollar (USD) weighed on EUR, due to the currencies’ negative correlation. In addition, fading hopes for peace in Ukraine put some pressure on the euro.
Eurozone economic data is thin on the ground today. Therefore, the single currency could trade without a clear direction.
US dollar (USD) buoyed by rising Treasury yields
The US dollar trended broadly higher during yesterday’s session as rising US Treasury yields gave the ‘greenback’ a boost.
Furthermore, disappointment surrounding the US-Russia talks on Ukraine helped to support the safe-haven currency.
USD exchange rates could potentially see limited movement today as markets await the Federal Reserve meeting minutes due out tomorrow morning.
Canadian dollar (CAD) steady as inflation beats forecasts
The Canadian dollar (CAD) managed to rise against its weaker peers yesterday as Canadian inflation exceeded expectations, causing markets to trim bets on more Bank of Canada (BoC) rate cuts.
Oil price dynamics may drive the commodity-linked ‘loonie’ today amid a lack of economic data from Canada.
Data releases
11:00 NZD RBNZ Interest Rate Decision
17:00 GBP Inflation Rate (Jan)