Australian dollar (AUD) soars as inflation beats forecasts
The Australian dollar (AUD) surged yesterday, hitting yearly highs against some peers, as hotter-than-forecast inflation boosted bets on another Reserve Bank of Australia (RBA) interest rate hike.
Headline inflation held at 3.8% in January, rather than easing to 3.7%, while the trimmed mean CPI accelerated from 3.3% to 3.4%. While AUD soared in response, it relinquished some of its gains as profit-taking set in.
Notable Australian data is absent from today’s economic calendar, likely leaving AUD to trade on market risk appetite.
New Zealand dollar (NZD) fluctuates despite risk-on mood
The New Zealand dollar (NZD) initially firmed yesterday amid a risk-on mood, before facing volatility during the European session.
Looking ahead, a forecast improvement in New Zealand business confidence in February could underpin the ‘kiwi’ through today’s session.
Pound (GBP) wavers in absence of data
The pound (GBP) fluctuated yesterday as an ongoing lack of UK economic data left the currency exposed to turbulence in the currency market.
GBP was also somewhat muted ahead of today’s by-election in the Greater Manchester constituency of Gorton and Denton, which is seen as a key test for Prime Minister Keir Starmer’s Labour Party.
Sterling may be subdued today as UK economic data remains thin on the ground and voters take to the polls in the Gorton and Denton by-election.
Euro (EUR) undermined by weaker German data
The euro (EUR) was mixed yesterday, although it slipped against stronger peers after an unexpected deterioration in German consumer confidence heading into March.
The latest GfK consumer confidence index printed at -24.7, down from -24.2 and missing forecasts for an improvement to -23.1
Turning to today, the latest Eurozone economic sentiment index is in focus. A forecast improvement could support the euro.
US dollar (USD) softens amid risk-on mood
The safe-haven US dollar (USD) weakened against its more risk-sensitive rivals yesterday as a cheery market mood undermined the ‘greenback’.
However, a slight adjustment in Federal Reserve interest rate expectations spared USD from further losses, with traders pushing back bets for a Fed rate cut.
The latest US initial jobless claims figure could impact USD today. Could an expected rise in claims put pressure on the US dollar?
Canadian dollar (CAD) pressured as oil prices ease
The crude-linked Canadian dollar (CAD) trended broadly lower yesterday amid a slight decline in oil prices.
Oil price movements could drive CAD exchange rates today, with investors likely keeping an eye on the US-Iran nuclear negotiations in Geneva.
Data releases
10:00 NZD ANZ Business Confidence (Feb)
18:30 EUR ECB President Lagarde Speech
20:00 EUR Economic Sentiment (Feb)
23:30 USD Initial Jobless Claims (21/Feb)