Australian Dollar (AUD) Trends Up despite Weak Consumer Confidence
The Australian Dollar (AUD) rose against its peers yesterday in spite of poor consumer confidence data from Westpac Banking Corporation.
Consumer confidence fell by 1.3% in February rather than the 0.2% expected: sentiment was weighed down by concerns over the cost of living and prospects of higher interest rates. AUD trading remained buoyant, however, as a risk-on mood supported the ‘Aussie’.
Given a lack of significant Australian data tomorrow, AUD will likely trade according to risk sentiment. If risk-on trading continues, the Australian Dollar may enjoy further tailwinds.
Pound (GBP) Gains Capped as Brexit Blamed for Decrease in Trade
Trade in the Pound (GBP) was mixed through Wednesday’s session as a lack of economic data left the currency to trade on other factors.
Analysts blamed Brexit for a drop in trade between the UK and Germany, with a group of MPs declaring that the main impact of the UK’s departure from the EU had been ‘increased costs, paperwork and border delays’.
Bank of England (BoE) Governor Andrew Bailey is due to speak overnight potentially influencing GBP exchange rates. If the Governor strikes a hawkish tone, Sterling may enjoy support.
Euro (EUR) Falls in Spite of USD Weakness
The Euro (EUR) slumped against its peers in midweek trade, as Germany’s trade surplus fell from €12bn last month to €7bn in December, on an annualised basis.
Imports grew by more than exports in the past year, causing the decline: exports to China fell by 8.9% and to Britain by 2.6%, although sales to the US increased by 16.7%. December’s data marked the fifth consecutive trade surplus contraction.
Speeches from European Central Bank policymakers Luis de Guindos and Philip Lane may affect EUR trading today, alongside US Dollar (USD) dynamics – although USD downside failed to buoy the single currency yesterday.
US Dollar (USD) Sinks as Risk-On Trading Dims Safe-Haven Appeal
The US Dollar dipped on Wednesday as upbeat market sentiment subdued the safe-haven currency.
A sharp pullback in US Treasury bond yields added to the ‘Greenback’ selling pressure, although losses were capped by the expectation of hawkish Federal Reserve rhetoric in response to today’s inflation data. Inflation looks to print at 7.3%, well above the Fed’s 2% target.
If inflation prints at or above expectations, USD may enjoy tailwinds as investors anticipate a more aggressive approach to monetary policy. If the CPI misses forecasts, however, the ‘Greenback’ may come under pressure.
Canadian Dollar (CAD) Tumbles despite Rising Oil Prices
The Canadian Dollar (CAD) traded in a narrow range yesterday, falling against several rivals in spite of rising oil prices. Crude oil rose above $89 per barrel as trade tussles between the US and China threatened regular oil supplies.
New Zealand Dollar (NZD) Buoyed by Upbeat Market Mood
The New Zealand Dollar (NZD) lifted on Wednesday as a risk-on mood supported trading sentiment. NZD also benefitted from a strong Australian Dollar: Chinese supply chain difficulties appeared to have little effect.
Tomorrow’s PMI may lend the ‘Kiwi’ some support, as business activity is expected to have increased in January.
Data Releases
Feb 10th 22:00 EUR ECB de Guindos Speech N/A
Feb 10th 23:15 EUR ECB Lane Speech N/A
Feb 10th 23:30 USD Inflation Rate (Jan) 7.3%
Feb 10th 23:30 USD Initial Jobless Claims (5/Feb) 230K
Feb 11th 06:15 GBP BoE Bailey Speech N/A
Feb 11th 07:30 NZD Business PMI (Jan) 54