Australian dollar (AUD) pressured by Chinese inflation disappointment
The Australian dollar (AUD) closed last week’s session on a sour note, pressured by softer-than-forecast Chinese inflation figures that reinforced concerns about subdued demand in Australia’s largest trading partner.
Chinese inflation only rose 0.8 % year-on-year in December, highlighting the country’s continued struggle to combat disinflationary pressures.
Domestic data is in short supply at the start of this week, which may leave the ‘Aussie’ exposed to market risk dynamics.
New Zealand dollar (NZD) slides in downbeat trade
The New Zealand dollar (NZD) also faltered on Friday as a cautious market mood left the risk-sensitive currency vulnerable to losses.
If this risk-off mood persists, it’s likely the ‘kiwi’ will remain on the defensive through the start of this week’s session.
Pound (GBP) wavers in absence of data
Trade in the pound (GBP) was mixed at the end of last week’s session, as the continued absence of meaningful UK data left Sterling driven by broader FX trends.
This resulted in the pound appreciating against more risk-sensitive currencies while depreciating against its more resilient peers.
UK data remains in short supply at the start of this week, which may leave Sterling at the mercy of wider market movement.
Euro (EUR) dented by underwhelming data
The euro (EUR) struggled on Friday, initially coming under pressure after Germany’s latest trade figures reported a shock contraction in exports in November.
EUR sentiment then remained subdued as subsequent data showed that Eurozone retail sales also slowed over the same period.
Turning to the start of this week, movement in the single currency may be limited, with EUR investors erring on the side of caution ahead of talks between the US and Denmark regarding the future of Greenland.
US dollar (USD) firms as unemployment falls
The US dollar (USD) appreciated at the end of last week as USD investors digested the latest US non-farm payroll report.
While December’s data reported a slowdown in US job creation, the data also reported unemployment unexpectedly fell to 4.4%, which appeared to temper dovish Federal Reserve bets and boost USD demand.
Coming up, USD investors may look to speeches by Fed policymakers Raphael Bostic and Tom Barkin for fresh impetus today. If they strike a dovish note, the US dollar is likely to weaken.
Canadian dollar (CAD) undermined by rising unemployment
The Canadian dollar (CAD) stumbled on Friday as CAD investors were dismayed by a larger-than-expected increase in domestic unemployment last month.
Looking ahead, the ‘loonie’ may be able to bounce back at the start of this week if we see oil prices continue to appreciate.