Australian Dollar (AUD) Trades Mixed on Bearish Headwinds
The Australian Dollar (AUD) fell against several peers yesterday as a risk-off mood dominated markets.
Losses were capped, however, as investors anticipate an end to the Reserve Bank of Australia (RBA)’s bond- buying programme when it meets next week. Economists polled by Reuters expect that the central bank will now raise interest for the first time in November 2022.
Australian PPI data is likely to influence trading today – Producer Price Inflation is expected to have risen to 3.1% in Q4, on an annualised basis. Rising price pressures could buoy the ‘Aussie’, supporting the RBA’s decision to tighten monetary policy.
Pound (GBP) Stumbles in Spite of Upbeat Retail Data
The Pound (GBP) sank against the majority of its peers on Thursday as risk-off headwinds pressured the currency. Upbeat distributive trades data was unable to counter downside, despite the UK’s retail sales balance jumping to +28.
Also dampening Sterling sentiment, a report concerning the Prime Minister’s lockdown activities has yet to materialise, and EU representatives have warned that London must ‘maintain political goodwill’ if it wants a quick deal on the Brexit treaty.
A lack of data leaves GBP to trade on external factors today – if Sue Gray’s report is published and damages the PM’s standing, Sterling may face considerable downside.
Euro (EUR) Weakens as US Dollar Enjoys Tailwinds
The Euro (EUR) inched down during yesterday’s session, as strength in the US Dollar (USD) undermined better-than-expected German consumer confidence data.
According to the GfK Group, consumer morale has improved in Germany this year, as households hope for an improvement in inflation and possible easing of the pandemic situation in spring.
Into today, German GDP is in the spotlight. The country’s economy is expected to have slowed down in the final quarter of 2021. If the data prints as expected, the single currency could extend its decline.
US Dollar (USD) Bolstered by GDP, Optimistic Fed Outook
The US Dollar firmed against its peers on Thursday as US GDP revealed that in the last quarter of 2021, the US economy expanded by more than expected.
While durable goods orders fell and initial jobless claims remained high compared with December’s figures, the ‘Greenback’ maintained a positive trajectory as investors recalled yesterday’s hawkish comments from Federal Reserve Chairman Jerome Powell.
Trading is likely to be influenced by the annual PCE price index today. As the Fed’s preferred measure of inflation, price growth is likely to support the central bank’s policy tightening outlook, lending USD upside.
Canadian Dollar (CAD) Buoyed by BoC Projections
The Canadian Dollar (CAD) retained its upside momentum yesterday despite easing crude oil prices. WTI demand forecasts remained hopeful, however, as geopolitical tensions continued unresolved.
CAD investors were also optimistic regarding the actions of Canada’s central bank. The Bank of Canada (BoC) confirmed midweek that an interest rate hike is on the cards.
New Zealand Dollar (NZD) Fluctuates on Risk Aversion
Upside was limited for the New Zealand Dollar (NZD) on Thursday as risk-off headwinds subdued support for perceived riskier assets. The ‘Kiwi’ managed to find some support on intermittent AUD strength.
Data Releases
Jan 28th 10:30 AUD PPI (Q4) 3.1%
Jan 28th 19:00 EUR German GDP Growth Rate Flash (Q4) 1.8%
Jan 28th 20:00 EUR Economic Sentiment (Jan) 114.5
Jan 28th 23:30 USD PCE Price Index (Dec) 5.9%
Jan 29th 01:00 USD Michigan Consumer Sentiment Final (Jan) 68.7