Pound (GBP) Subdued on Dreadful Inflation Figures
The Pound (GBP) struggled to find any momentum mid-week after the UK’s consumer price index revealed inflation sank to a three-year low in December.
This fanned expectations for an imminent rate cut from the Bank of England (BoE), with CME’s BoE Watch Tool placing the odds of a January rate cut at nearly 60%.
Expect Sterling to remain hard-pressed by BoE rate speculation through today’s session, in the absence of any notable economic data.
Euro (EUR) Buoyed in Spite of Weak German GDP Figures
The Euro (EUR) edged higher on Wednesday, despite Germany’s full-year GDP figures confirming a sharp slowdown in the Eurozone’s largest economy last year.
Destatis reported domestic growth fell from 1.5% to 0.6% in 2019, Germany’s slowest pace of expansion since 2013. However, with markets anticipating the drop well ahead of time, the impact on EUR exchange rates proved negligible.
Looking ahead, the European Central Bank (ECB) will be in focus for EUR investors today, with the publication of the minutes from the bank’s December policy meeting and a speech by ECB President Christine Lagarde both on the docket.
US Dollar (USD) Slips on US-China Trade Deal Disappointment
The US Dollar (USD) faced some broad losses yesterday as markets reacted to the signing of the US-China ‘phase one’ trade deal.
While markets welcomed the deal as a sign of easing tensions between the two powers, it was not seen as ‘momentous’ as President Trump claimed, with doubts it will provide much of a boost to US growth.
Coming up today we have the publication of the latest US retail sales figures, with an expected rise in sales growth last month potentially providing a boost to the US Dollar later this afternoon.
Canadian Dollar (CAD) Flat amid Disagreements over USMCA
The Canadian Dollar (CAD) was left directionless on Wednesday after the Democrat Presidential candidates argued over the United States Mexico Canada Agreement (USMCA).
Both Elizabeth Warren and Bernie Sanders voiced their disapproval of the new trade agreement set to replace the North American Free Trade Agreement (NAFTA).
Australian Dollar (AUD) Spikes on US-China Deal
The Australian Dollar (AUD) leapt higher on Wednesday as AUD investors cheered the signing of the US-China trade deal.
While the deal received a lukewarm response from markets, it was still enough to underpin an uptick in risk appetite.
New Zealand Dollar (NZD) Lifted by Risk-On Mood
The New Zealand Dollar (NZD) also trended higher yesterday, buoyed by risk-on sentiment following the signing of the US-China trade deal.