Pound (GBP) Tumbles despite Robust UK Inflation
The Pound (GBP) ticked lower mid-week, coming under pressure despite a solid consumer price index revealing domestic inflation struck a six-month high in January.
The Office for National Statistics (ONS) reported that inflation leapt from 1.3% to 1.8% last month, soaring past expectations for a more modest 1.6% increase.
Likely undermining the upbeat CPI figures was some fresh Brexit uncertainty as the EU’s chief negotiator Michel Barnier warned a Canada-style free-trade deal would be impossible with the UK.
However, Sterling may look to recoup its losses in today’s session, with the UK’s latest retail sales figures expected to show a sharp increase in sales growth last month.
Euro (EUR) Stalls amid German Concerns
The Euro (EUR) was mostly rangebound through Wednesday’s session amidst growing concern over the state of the Eurozone economy.
EUR investors are particularly worried about Germany, with fears that the Eurozone’s largest economy may be on the brink of a recession as the coronavirus crisis looks likely to enact a heavily toll on German exports.
Looking ahead, EUR investors will eye the Eurozone’s latest consumer confidence index for fresh impetus today. Will coronavirus concerns have weakened household sentiment this month?
US Dollar (USD) Firms as Fed Sees Current Monetary Policy as Appropriate
The US Dollar (USD) continued to trend higher yesterday, with the main focus being on the publication of the minutes from the Federal Reserve’s most recent policy meeting.
The minutes revealed that policymakers see the US economy continuing to expand at a moderate pace and that monetary policy is likely to remain appropriate ‘for a time’.
Coming up, a slide in the Philadelphia manufacturing index in February could weigh on the US Dollar this afternoon.
Canadian Dollar (CAD) Buoyed by Upbeat Inflation
The Canadian Dollar (CAD) firmed on Wednesday as CAD investors welcomed a stronger-than-expected Canadian CPI reading as well as a strong pick-up in oil prices.
The jump in inflation reflected well on the ‘Loonie’ as it relieves pressure on the Bank of Canada (BoC) to cut interest rates in the near-term.
Australian Dollar (AUD) Tumbles on Disappointing Jobs Report
The Australian Dollar (AUD) fell sharply overnight on Wednesday in response to some disappointing domestic employment figures.
While employment growth beat expectations, a sharper than expected increase in the unemployment rate dragged on the ‘Aussie’ as it puts more pressure on the Reserve Bank of Australia (RBA) to cut interest rates.
New Zealand Dollar (NZD) Slips as Risk Appetite Weakens
The New Zealand Dollar (NZD) also fell back overnight, with markets shunning the ‘Kiwi’ as the People’s Bank of China (PBoC) cut interest rates in response to the coronavirus, leading to a slump in market risk appetite.