Australian dollar (AUD) bounces back from inflation-driven losses
The Australian dollar (AUD) initially faced headwinds yesterday, after February’s consumer price index reported an unexpected cooling of inflation and stoked Reserve Bank of Australia (RBA) interest rate cut bets.
However, lingering optimism surrounding Australia’s recent budget and positive risk flows ultimately led the ‘Aussie’ to close the session on a high.
Domestic data is thin on the ground today, likely leaving movement in the Australian dollar to remain tied to market risk sentiment. If the mood remains broadly upbeat, the ‘Aussie’ may maintain a positive trajectory.
New Zealand dollar (NZD) bolstered by risk-on mood
The New Zealand dollar (NZD) firmed on Wednesday as the risk-sensitive currency also benefitted from the upbeat market mood.
If the risk-positive sentiment persists, it’s likely the ‘kiwi’ will look to build on these gains today.
Pound (GBP) slides as UK inflation cools and growth slashed
The pound (GBP) proved to be Wednesday’s worst performer, with initial losses following a weaker-than-expected inflation print which revived bets for a Bank of England (BoE) interest rate cut in May.
The GBP selling bias was then reinforced after UK Chancellor Rachel Reeves delivered her Spring Statement, outlining cuts to public spending as well as confirming the UK’s growth forecast for 2025 has been cut in half.
Coming up, BoE policymaker Dr Swati Dhingra is set to speak today. As one of the most dovish members of the BoE her remarks could extend the Sterling selloff if she reinforces bets for a May rate cut.
Euro (EUR) trades sideways in absence of data
The euro (EUR) traded without strong direction on Wednesday amid the absence of any notable Eurozone economic releases.
While the single currency was underpinned by its negative correlation with the US dollar (USD), ongoing concerns over a potential EU-US trade war kept a lid on the euro.
In the continued absence of any EUR data of note, the euro may be left adrift again today.
US dollar (USD) softens as safe-haven demand falters
The US dollar faced headwinds yesterday as the upbeat market mood limited demand for safe-haven assets.
However, these losses were tempered by the latest US durable goods orders data, after reporting order growth unexpectedly accelerated last month.
The US will publish its finalised GDP figures for the last quarter of 2024 later today. If these confirm US economic growth slowed to its lowest levels since early 2024, the ‘greenback’ is likely to remain on the back foot.
Canadian dollar (CAD) bolstered by rising oil prices
The Canadian dollar (CAD) strengthened on Wednesday as a rise in oil prices made the commodity-linked currency more attractive to investors.
CAD data remains in short supply today, likely leaving the ‘loonie’ to continue to be driven by oil price dynamics.
Data releases
18:30 GBP BoE Dhingra Speech
22:30 USD GDP (Q4)