Australian dollar (AUD) retreats as sentiment sours
The Australian dollar (AUD) initially strengthened yesterday amid expectations that today’s inflation figures would reinforce bets on another Reserve Bank of Australia (RBA) interest rate hike.
However, the risk-sensitive ‘Aussie’ then slid during the European session as worries about new US tariffs soured the market mood.
Australia’s latest consumer price index is the focus for AUD investors today. Signs of stubborn inflation could boost RBA rate hike bets and lift the ‘Aussie’, while any evidence of easing price pressures could undermine the currency.
New Zealand dollar (NZD) pulls back amid risk aversion
The New Zealand dollar (NZD) also initially firmed before faltering amid the risk-off market mood yesterday, although NZD’s movements were less pronounced than AUD’s.
Today, New Zealand economic data is thin on the ground. Therefore, the ‘kiwi’ may trade true to its risk-sensitive nature and its correlation with AUD.
Pound (GBP) firms following BoE remarks
After wobbling through much of the session, the pound (GBP) then found its footing in the evening following comments from Bank of England (BoE) policymakers.
BoE Governor Andrew Bailey said the bank’s decision in March ‘genuinely remains an open question’, while Chief Economist Huw Pill and policymaker Megan Greene raised concern about upside inflation risks.
With British data absent from today’s economic calendar, Sterling could remain subdued ahead of a key by-election in Greater Manchester tomorrow.
Euro (EUR) choppy amid Russia-Ukraine concerns
The euro (EUR) was mixed yesterday, with a lack of Eurozone data leaving EUR exposed to volatility and vulnerable to losses against its stronger rivals.
Concerns about the ongoing Russia-Ukraine war put some pressure on the common currency, as the Kremlin vowed to pursue its military aims on the fourth anniversary of its full-scale invasion.
Looking forward, an expected improvement in German consumer confidence in March could reflect positively on the euro today. Meanwhile, the latest final German GDP figures and Eurozone inflation could impact EUR, if they deviate from previous estimates.
US dollar (USD) wavers amid market uncertainty
The US dollar (USD) was mixed yesterday, although it managed to post modest gains against weaker peers, amid a shift in market risk appetite and tariff uncertainty.
While markets were initially risk-off amid worries about how new US tariffs could impact global trade, some upbeat US data later in the session cheered investors and stifled USD’s potential.
Turning to today, President Donald Trump will deliver his State of the Union speech. If he signals that there could be an escalation in tariff measures, it could dent USD and spark wider market volatility.
Canadian dollar (CAD) wavers lower in tandem with oil
The crude-linked Canadian dollar (CAD) wobbled yesterday amid choppy oil prices, with CAD trending broadly lower overall.
Amid a lack of Canadian data today, oil prices could drive CAD movement once again. If prices rise amid US-Iran tensions, the ‘loonie’ may gain ground.
Data releases
10:30 AUD Inflation Rate (Jan)
12:00 USD President Trump State of the Union Speech
17:00 EUR German GfK Consumer Confidence (Mar)
17:00 EUR German GDP Growth Rate (Q4)
20:00 EUR Inflation Rate (Jan)