Pound Rallies as UK Vaccine Disruption Fears Dismissed
The Pound stumbled in early trade yesterday, as Sterling sentiment suffered amidst concerns over a likely extension to England’s national lockdown as well as concerns over potential vaccine shortages.
But GBP exchange rates rebounded in the second half of Thursday’s trading session as Cabinet Office minister Michael Gove dismissed fears UK vaccine supplies could be impacted as a result of the EU’s row with UK-based producer AstraZeneca.
In the continued absence of any notable UK data releases today, expect to see UK coronavirus developments continue to act as a key catalyst for GBP exchange rates.
Euro Firms as German CPI Beats Expectations
After a slow start, the Euro firmed against the majority of its peers on Thursday in response to a stronger-than-expected German consumer price index.
January’s preliminary CPI release reported domestic inflation accelerated from –0.3% to 1%, boosting the Euro in spite of the potential communication challenges this could pose to the European Central Bank (ECB) in tackling weak inflation in the wider Eurozone.
In the spotlight today will be the publication of Germany’s preliminary GDP release for the fourth quarter.
Economists are predicting Germany will have narrowly avoided a contraction at the end of 2020, which, if correct, would see Europe’s largest economy avoid a double-dip recession this winter and encourage the Euro to trend higher.
USD Exchange Rates Fall as US GDP Reverses Risk-Off Flows
The US Dollar trended higher through the first half of yesterday’s European trading session as strained risk appetite benefited the safe-haven currency.
However, these risk-off flows reversed later in the session after confirmation of an expansion in US GDP in the fourth quarter helped to cheer markets.
Turning to today’s session, the focus for USD investors looks to be on the latest PCE price index. Will the Federal Reserve’s preferred indicator for inflation report an acceleration in price growth last month?
Canadian Dollar Extends Slide in Spite of Rising Oil Prices
The Canadian Dollar continued to tick lower on Thursday as investors continued to shun the commodity-linked ‘Loonie’ despite WTI crude prices topping $53 a barrel after rallying 1%.
Coming up, the publication of Canada’s latest GDP figures could dent CAD exchange rates today if the recent trend for slowing growth persists in November’s monthly release.
Australian Dollar Slumps as China Threatens Taiwan
The Australian Dollar struck lower overnight on Thursday, with investors shunning the risk-sensitive ‘Aussie’ once more after China warned that Taiwan independence ‘means war’.
New Zealand Dollar Slides as Risk Sentiment Sours
The New Zealand Dollar also retreated in overnight trade as tensions in Taiwan and concerns over the Gamestop retail trade frenzy both spooked markets.