Australian Dollar (AUD) Bolstered by RBA Rate Hike Bets
The Australian Dollar (AUD) climbed yesterday as markets continued to bet on further policy tightening from the Reserve Bank of Australia (RBA).
Signs of China’s desire for closer diplomatic ties with Australia also pushed the ‘Aussie’ higher following comments by Chinese President Xi Jinping.
Looking ahead, a forecast slip in fourth quarter PPI could weigh on AUD. The data may prompt a pullback in RBA rate hike bets.
New Zealand Dollar (NZD) Buoyed by Risk-On Mood
The New Zealand Dollar (NZD) gained ground yesterday. A return of global risk appetite following US macro data and a strong commodities market lent support to the ‘Kiwi’.
Today, the latest New Zealand business confidence index is expected to improve slightly, which may lend NZD some support. However, with morale likely to remain deep in negative territory, any gains could be limited.
Pound (GBP) Drops as Retail Sales Disappoint
The Pound (GBP) slipped against many of its peers on Thursday. Sterling came under pressure following the release of the Confederation of British Industry’s (CBI) latest retail sales figures. Sales in January fell by more than forecast.
On the other hand, GBP saw its losses limited by persistent market bets on a 50bps rate hike from the Bank of England (BoE).
Sterling will see no significant data today. Shifts in risk appetite and domestic headwinds could drive movement in the Pound.
Euro (EUR) Slides amid Return of Risk Appetite
The Euro (EUR) was pushed lower by a return of global risk appetite yesterday. Fears of further escalations in the Russia-Ukraine conflict also weighed on EUR.
The single currency found continued support from bets on further aggressive rate hikes from the European Central Bank (ECB), however.
A speech from ECB President Christine Lagarde could push EUR higher today if she echoes her previous hawkish comments.
US Dollar (USD) Rises following Above-Forecast GDP Data
The US Dollar (USD) edged higher against its peers on Thursday. Above-forecast GDP growth and durable goods figures bolstered USD.
However, the data failed to shake off market convictions that the Federal Reserve would only raise rates by 25bps at its next meeting. These softer bets capped gains for USD.
A forecast uptick in the core PCE price index, the Fed’s preferred measure of inflation, could bolster USD today. If inflation shows signs of being stickier than expected, the US central bank may opt for more rate rises.
Canadian Dollar (CAD) Boosted by Rising Oil Prices
The commodity-linked Canadian Dollar (CAD) firmed on Thursday. CAD found support from rising oil prices and a stronger US Dollar.
With no data releases today, the ‘Loonie’ will likely be affected by any shifts in oil markets.
Data Releases
Jan 27th 10:00 NZD ANZ Business Confidence -66
Jan 27th 10:30 AUD PPI (Q4) 1.7%
Jan 27th 20:30 EUR ECB President Lagarde Speech
Jan 27th 23:30 USD Core PCE Price Index MoM (Dec) 0.3%
Jan 27th 23:30 USD Personal Income (Dec) 0.2%
Jan 27th 23:30 USD Personal Spending (Dec) -0.1%