US Dollar Retreats despite Hawkish Fed Testimony

Pound (GBP) Volatile amid Profit-Taking

The Pound (GBP) initially spiked as strong UK jobs data and Bank of England (BoE) rate hike bets gave the currency a lift.

Sterling then suffered some profit-taking as investors sought to cash in on the Pound’s strength, causing it to dip against many of its peers.

In the absence of UK data today, GBP investors will likely be keeping their eyes on domestic headlines. In particular, Brexit, business and Covid news could influence Sterling.

Euro (EUR) Fluctuates on ECB Comments

The Euro (EUR) wavered during yesterday’s trade amid some mixed messages from the European Central Bank (ECB).

ECB President Christine Lagarde tried to reassure people that the bank took inflation seriously, although she did not seem to change her policy view. Meanwhile, new governing council member Joachim Nagel argued that ‘inflation could remain high for longer than expected.’

Eurozone industrial production could influence EUR today, as could the currency’s negative correlation to the US Dollar (USD).

US Dollar (USD) Slips despite Hawkish Fed

The US Dollar (USD) firmed yesterday morning ahead of Federal Reserve Chair Jerome Powell’s testimony in front of the US Senate.

However, the ‘Greenback’ started to weaken as Powell testified. Despite the Fed chief’s hawkish tone, he revealed nothing new to markets and USD dropped.

Turning to today, the US inflation rate for December is expected to rise to 7%. A high reading could boost the ‘Greenback’.

Canadian Dollar (CAD) Climbs as Oil Rallies

The Canadian Dollar (CAD) found support during yesterday’s session as oil prices climbed, with WTI crude surging by over $2 a barrel.

With no key Canadian data out today, crude prices could continue to drive movement in the ‘Loonie’.

Australian Dollar (AUD) Rangebound as Markets Await US CPI

The Australian Dollar (AUD) traded sideways overnight as markets were quiet ahead of the US CPI print this afternoon.

New Zealand Dollar (NZD) Flat Overnight, Stumbles this Morning

The New Zealand Dollar (NZD) was also rangebound in overnight trade, though it slipped as the European session began this morning.

Samuel Birnie

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