Pound Mixed, Euro Firms and US Dollar Rebounds as Markets React to Omicron

Pound (GBP) Mixed as Brexit Offsets Positive Data 

The Pound (GBP) was mixed yesterday, despite consumer credit rising to £0.7bn last month, well above expectations of £0.4bn, as households borrowed more amid the post-lockdown rebound. 

This positive data was offset, however, by ongoing Brexit concerns. Anglo-French relations are fraught over migrant Channel crossings and the fishing rights row, while Northern Ireland protocol negotiations remain deadlocked. 

With no UK data out today, Brexit headlines and domestic news may continue to influence GBP exchange rates. 

Euro (EUR) Firms as Omicron Casts Doubt on Rate Hikes 

The Euro (EUR) edged higher against many of its counterparts yesterday as the Omicron variant continued to dampen rate hike bets, thereby supporting the dovishly priced single currency

As-expected drops in both consumer confidence and economic sentiment may have capped gains but didn’t prompt much movement. Nor did a surge in German inflation, which hit 6%. 

The Euro could enjoy a boost this morning after Germany’s positive unemployment figures, while the Eurozone’s latest CPI may not have much impact given the European Central Bank’s (ECB) dovish stance. 

US Dollar (USD) Bounces Back despite Improving Market Mood 

The safe-haven US Dollar (USD) initially softened on Monday morning as risk appetite improved slightly following last week’s Omicron market shock. 

However, the ‘Greenback’ managed to bounce back as the session headed into the afternoon, with USD bulls seemingly still confident in the currency’s strength. 

USD investors may be focusing on Fed speak today to determine whether the Omicron variant is likely to delay a rate hike. In the meantime, risk appetite may be the main driver of movement in the US Dollar. 

Canadian Dollar (CAD) Wavers as Current Account Misses Expectations 

The Canadian Dollar (CAD) was muted yesterday as crude prices held fairly flat and Canada’s current account surplus fell short of forecasts. 

With oil prices seeming to trend downwards and Canadian GDP expected to slow, CAD could struggle in today’s session. 

Australian Dollar (AUD) Tumbles on Vaccine Warning 

The Australian Dollar (AUD) crashed overnight as Omicron fears continue to weigh on global markets, with Moderna CEO Stéphane Bancel warning that existing vaccines may not be as effective against the new strain. 

New Zealand Dollar (NZD) Slides as Market Sentiment Sours 

Likewise, the New Zealand Dollar (NZD) dropped in overnight trade as the gloomy market mood sapped the appeal of the risk-sensitive ‘Kiwi’. 

Samuel Birnie

Contact Samuel Birnie


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