US Dollar Surges towards Multi-Month Highs as US Inflation Hits 6.2%

Pound (GBP) Trips as Brexit Concerns Persist 

The Pound (GBP) fell against most of its rivals through yesterday’s session as Brexit anxiety continues to put downward pressure on the currency. 

Although Brexit Minster Lord Frost stepped back from an imminent triggering of Article 16, GBP investors remained concerned over the future of UK-EU trade relations. 

Turning to today, Sterling may struggle as the UK’s latest GDP figures show a sharp slowdown in growth in the third quarter of this year. 

Euro (EUR) Weakens as Germany Cuts Growth Forecasts 

The Euro (EUR) lost ground yesterday after German government advisers cut their growth forecasts for this year from 3.1% to 2.7%. 

A stronger US Dollar (USD) in the afternoon put more pressure on the Euro due to the currencies’ strong negative correlation. 

EUR investors may look for fresh impetus from the European Central Bank’s (ECB) macroeconomic projections later this morning, which cover growth, inflation, wages, unemployment and trade. 

US Dollar (USD) Zigzags Higher on Surge in US Inflation 

The US Dollar (USD) strengthened yesterday, despite some volatile trade, as US inflation soared to a 31-year high of 6.2%. This in turn boosted bets for a sooner-than-expected rate hike from the Federal Reserve. 

The ‘Greenback’ also caught some bids thanks to the latest initial jobless claims figures, which hit a new post-pandemic low. 

This morning, the US Dollar has hit fresh multi-month highs amid a risk-off market mood. With no US data due out today, risk appetite could drive USD. 

Canadian Dollar (CAD) Fairly Flat despite Dip in Oil Prices 

The Canadian Dollar (CAD) had a mixed session yesterday, trading mostly sideways overall, despite a sharp drop in WTI crude. Forecasts that oil demand will exceed pre-pandemic levels next year may have cushioned the blow. 

Looking ahead, a lack of Canadian data today is likely to see the ‘Loonie’ remain sensitive to oil prices. 

Australian Dollar (AUD) Slips as Unemployment Rate Rises 

The Australian Dollar (AUD) slipped overnight as Australia’s unemployment rate rose by more than expected, increasing from 4.6% in September to 5.2% in October. 

New Zealand Dollar (NZD) Dented by Risk-Off Sentiment 

The New Zealand Dollar (NZD) also fell in overnight trade as a bearish market mood saw traders shun the risk-sensitive ‘Kiwi’. 

Samuel Birnie

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