Pound (GBP) Loses CPI Gains as Rate Hike Hopes Fade
The Pound (GBP) initially strengthened yesterday after the UK’s CPI printed at a ten-year high, boosting bets for a rate hike at the Bank of England’s (BoE) meeting today.
But Sterling lost these gains in the afternoon as economists weighed in on the prospects of a rate rise, with the general consensus being that policymakers will exercise caution due to the ongoing threat of Omicron.
Nevertheless, investors will be anxiously awaiting the bank’s decision today. GBP will likely drop if the BoE leaves its Bank Rate unchanged.
Euro (EUR) Wobbles ahead of Fed Decision
The Euro (EUR) was mixed yesterday as EUR investors showed caution ahead of the Federal Reserve’s interest rate decision.
A lack of Eurozone data added to the uncertainty around the single currency, leaving it to trade erratically against its rivals.
With the Fed decision out the way, attention will now turn to the European Central Bank (ECB). If the bank maintains its dovish bias, EUR may struggle.
US Dollar (USD) Slips following Hawkish Fed
The US Dollar (USD) gained ground during some turbulent trade yesterday as investors geared up for the Fed policy announcement.
The ‘Greenback’ fell sharply following the Fed’s decision, despite the central bank speeding up its tapering plans and signalling three rate hikes next year. The downside seems to have come from USD profit-taking, as expectations of a hawkish Fed had already boosted the US Dollar in recent weeks.
This afternoon we have the latest US jobless claims and Markit PMIs. With economists expecting positive results, USD could regain some ground.
Canadian Dollar (CAD) Slips as CPI Holds Steady
The Canadian Dollar (CAD) fell yesterday as Canada’s inflation rate held at 4.7%, disappointing some investors who’d hoped for a higher reading.
In addition, muted crude prices left the oil-linked ‘Loonie’ without much support.
Looking ahead, Canada’s latest ADP employment change figures could provide CAD with a boost if the labour market continues to recover.
Australian Dollar (AUD) Fluctuates on Mixed Data
The Australian Dollar (AUD) wavered in overnight trade after some mixed data. Australia’s Markit PMIs unexpectedly declined while the country’s unemployment rate fell by more than forecast.
New Zealand Dollar (NZD) Recovers as Risk Appetite Improves
The New Zealand Dollar (NZD) was initially subdued last night as GDP growth in New Zealand contracted by 3.7% in the third quarter of this year.
However, the risk-sensitive ‘Kiwi’ was able to regain ground amid a slight improvement in market mood.