Australian dollar (AUD) wobbles amid market uncertainty
The Australian dollar (AUD) wavered without a clear direction yesterday as a lack of fresh data muted the ‘Aussie’.
In addition, an uncertain market mood kept AUD confined to a narrow range.
Australian data remains thin on the ground today, likely leaving the ‘Aussie’ to trade on market risk appetite.
New Zealand dollar (NZD) rangebound amid mixed mood
The New Zealand dollar (NZD) also traded mostly sideways yesterday amid an absence of data and the mixed tone in markets.
Turning to today, NZD enjoyed a boost this morning after New Zealand GDP rebounded in the third quarter, alleviating some concerns around the health of the country’s economy.
Pound (GBP) plunges as UK inflation cools
The pound (GBP) slumped yesterday after the UK’s consumer price index for November missed forecasts and fuelled Bank of England (BoE) interest rate cut bets.
Headline inflation cooled from 3.6% to 3.2%, a much faster slowdown than the 3.5% expected, while core inflation unexpectedly eased from 3.4% to 3.2%.
Attention now turns to the BoE’s interest rate decision this evening. A 25bps rate cut is almost fully priced in, but Sterling could fall further if the bank strikes a dovish tone.
Euro (EUR) see-saws ahead of ECB decision
The euro (EUR) initially softened yesterday as EUR suffered from its strong negative correlation with a rising US dollar (USD).
However, the single currency regained ground in the evening as USD retreated and markets looked ahead to the European Central Bank (ECB) policy decision today.
The ECB is set to leave rates unchanged, while many analysts expect the bank to lift growth forecasts and strike a slightly more hawkish tone than at previous meetings. This could lift the euro overnight.
US dollar (USD) retreats amid dovish Fed comments
The US dollar rose through the first part of yesterday’s session amid a souring market mood and a modest pullback in Federal Reserve interest rate cut bets.
However, USD retreated in the evening as an improving mood dampened demand for the safe-haven currency and dovish comments from Fed policymaker Christopher Waller undermined USD.
The latest US CPI figures could provide the ‘greenback’ with fresh impetus today. Cooling inflation could dent USD while stubborn price pressures would likely lift the currency.
Canadian dollar (CAD) struggles despite uptick in oil
The crude-linked Canadian dollar (CAD) traded without a clear direction yesterday, with the currency even struggling to hold on to gains against weaker rivals, despite an uptick in oil prices.
Canadian data is absent from the calendar again today. If oil extends its upside, CAD could potentially gain ground.
Data releases
07:45 NZD GDP Growth Rate (Q3)
22:00 GBP BoE Interest Rate Decision
23:15 EUR ECB Interest Rate Decision
23:30 USD Inflation Rate (Nov)