Australian dollar (AUD) fluctuates at multi-month highs
The Australian dollar (AUD) struck multi-month highs against many of tis peers yesterday, with AUD initially propelled higher by hawkish comments from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser.
Hauser said that ‘inflation is too high’ and the RBA will ‘do what is needed’ to bring it back down. This boosted the ‘Aussie’, although profit-taking and market volatility led to choppy trade.
Turning to today, an expected easing in consumer inflation expectations could dampen AUD demand slightly. Market risk appetite will also likely influence the ‘Aussie’.
New Zealand dollar (NZD) initially buoyed by risk-on mood
The New Zealand dollar (NZD) initially rose yesterday as a risk-on mood supported the ‘kiwi’. However, NZD faced volatility in the evening.
With domestic data absent from the calendar today, risk sentiment could drive movement in the New Zealand dollar.
Pound (GBP) uncertain in absence of data
The pound (GBP) traded in a wide range yesterday, as a lack of UK economic data left Sterling exposed to wider market turbulence.
Ongoing political uncertainty in the UK also muted the pound, although GBP investors were somewhat comforted by the fading risk of an immediate leadership challenge to Prime Minister Keir Starmer.
The focus for GBP investors today will be the UK’s fourth-quarter GDP figures. A modest uptick in growth may not be enough to lift Sterling, while any unexpected results could lead to sharper swings.
Euro (EUR) dented by Russia-Ukraine concerns
The euro (EUR) weakened yesterday as Russia-Ukraine worries weighed on the currency.
EUR faced further selling pressure in the evening, due to its strong negative correlation with the rising US dollar (USD).
Amid a lack of Eurozone data today, EUR investors may focus on a speech by European Central Bank (ECB) policymaker Piero Cipollone. However, any comments may have a limited impact on the euro.
US dollar (USD) rebounds as payrolls beat forecasts
After initially slipping to multi-day lows yesterday, the US dollar then rebounded in the evening following a surprisingly strong non-farm payrolls report.
The US economy added 130,000 jobs in January, well above the 70,000 forecast, while unemployment unexpectedly dropped from 4.4% to 4.3%.
The latest US initial jobless claims figure could impact USD today. Markets may be sensitive to any signs indicating the strength of the American labour market.
Canadian dollar (CAD) pulls back amid US-Canada tensions
Having initially touched multi-week highs against some rivals yesterday, the crude-linked Canadian dollar (CAD) then retreated sharply, despite rising oil prices, amid escalating US-Canada tensions.
CAD could take its cues from oil price movements in the session ahead. Could a further appreciation in crude support the ‘loonie’?
Data releases
10:00 AUD Consumer Inflation Expectations (Feb)
17:00 GBP GDP Growth Rate (Q4)
19:00 EUR ECB Cipollone Speech
23:30 USD Initial Jobless Claims (07/Feb)