Australian Dollar (AUD) Firms on Commodity Tailwinds
The Australian Dollar (AUD) climbed on Friday as high demand for iron ore – one of Australia’s main exports – boosted ‘Aussie’ sentiment.
China is currently stockpiling the ore while ramping down steel production ahead of the winter Olympics. There are some concerns that the country’s stockpiles are reaching their upper limits, inevitably leading to a fall in demand.
A lack of data today leaves AUD to trade on external factors. Upbeat risk sentiment buoyed the currency last week, and may extend further tailwinds.
Pound (GBP) Suffers as UK GDP Disappoints
The Pound (GBP) fell against its peers at the end of last week, as UK GDP missed forecasts of 0.4% growth, printing at just 0.1%.
Experts are interpreting the data as a sign that the economic outlook has deteriorated: in response to the slowdown, some economists are speculating over the possibility of reintroducing economic support measures.
Sterling is likely to trade on risk sentiment today, in addition to Covid developments and any Brexit tensions. Tomorrow’s employment data will provide further trading stimulus.
Euro (EUR) Sentiment Dented by ECB Bond-Buying Plans
The Euro (EUR) slid down in the second half of Friday’s session, on reports that the European Central Bank (ECB) plans to buy between €40 and €60bn in bonds per month after March, despite rising fears about inflation.
As other central banks – namely the Federal Reserve – wind down monetary stimulus packages, the ECB’ policy divergence is inspiring bearish trading.
A lack of significant EU data leaves the single currency exposed to losses today – if the US Dollar (USD) finds support, headwinds may weigh upon Euro sentiment.
US Dollar (USD) Sinks as Inflation Prints As Expected
The US Dollar weakened against its peers at the end of the week as the latest US consumer price index printed in line with expectations, with inflation rocketing up to 6.8%.
Prior to the release, markets had been bullishly positioned for an upside surprise, explaining subsequent fall in the US Dollar.
USD traders may look to Covid developments and political relationships today for direction, given a lack of significant data.
Canadian Dollar (CAD) Resists Significant Downside as WTI Appreciates
The Canadian Dollar (CAD) found some support on Friday on a modest uptick in oil prices. The commodity-linked ‘Loonie’ benefitted as Omicron worries failed to quash a rally in WTI crude prices.
New Zealand Dollar (NZD) Tumbles as Business PMI Misses Estimates
The New Zealand Dollar (NZD) fell at the end of the week as a mixed market mood subdued trading sentiment; a weaker than expected business PMI published on Friday morning added to downside over November’s slowdown in manufacturing activity.