Australian dollar (AUD) firms on hawkish RBA bets
The Australian dollar (AUD) strengthened yesterday amid increasing expectations that the Reserve Bank of Australia (RBA) might raise interest rates in the coming months.
In addition, an upbeat market mood helped to underpin the risk-sensitive ‘Aussie’.
Today, Australia’s latest consumer price index takes centre stage. An expected cooldown in inflation could dent AUD, while any signs of stubborn price pressures could boost the currency.
New Zealand dollar (NZD) buoyed by cheery trade
The New Zealand dollar (NZD) also ticked higher yesterday amid the increase in risk appetite, although NZD trimmed its gains as sentiment moderated later in the session.
Looking ahead, New Zealand data remains absent from the calendar. As a result, market risk appetite could determine NZD’s direction once again.
Pound (GBP) slips as PMI misses forecasts
The pound (GBP) softened yesterday after the UK’s services PMI for December disappointed GBP investors.
The final PMI printed at 51.4, downwardly revised from 52.1, to show sluggish growth in the UK’s vital services sector last month.
Market-moving UK data is thin on the ground today, potentially leaving the pound to trade without a clear directional bias.
Euro (EUR) slides as US-EU tensions remain high
The euro (EUR) weakened yesterday as ongoing tensions between the US and the EU over the future of Greenland weighed heavily on EUR exchange rates.
This overshadowed some positive news that the US reportedly supports a post-ceasefire defence force for Ukraine. Meanwhile, a sharper-than-expected cooldown in German inflation also dented the euro.
The focus for EUR investors today falls on the Eurozone’s CPI for December. If inflation eased as expected last month, the euro could weaken.
US dollar (USD) mixed as risk appetite wavers
The US dollar (USD) initially softened yesterday as a risk-on mood and recent dovish comments from a Federal Reserve official continued to dampen USD demand.
However, the ‘greenback’ was able to gain ground against many of its weaker rivals in the evening as caution crept back into markets, providing the safe-haven US dollar with support.
Today brings a flurry of US economic data, the most impactful of which may be the ISM services PMI. If the data underperforms – as the manufacturing PMI did earlier this week – the ‘greenback’ may face selling pressure.
Canadian dollar (CAD) uncertain amid USD correlation
The Canadian dollar (CAD) traded in tandem with the US dollar yesterday, while choppy oil prices also saw the crude-linked currency’s direction shift throughout the session.
Looking forward, Canada’s latest Ivey PMI could influence the Canadian dollar today. Another contraction in economic activity in December may weigh on the ‘loonie’.
Data releases
10:30 AUD Inflation Rate (Nov)
20:00 EUR Inflation Rate (Dec)
23:15 USD ADP Employment Change (Dec)
01:00 CAD Ivey PMI s.a (Dec)
01:00 USD ISM Services PMI (Dec)
01:00 USD JOLTs Job Openings (Nov)