US Dollar Extends Post-CPI Downside

Pound (GBP) Fluctuates on Mixed Day for GBP 

The Pound (GBP) traded in a wide range yesterday, trending sideways overall, as political uncertainty over Boris Johnson’s premiership rocked the currency. 

Mixed economic news added to the volatility. While Tesco and M&S reported strong Christmas profits, the hospitality industry saw sales slump

Better-than-expected GDP data for November has boosted Sterling this morning. However, the upbeat figures show economic growth before Omicron hit, so GBP’s gains may be capped. 

Euro (EUR) Gains Capped by Dovish ECB 

The Euro (EUR) firmed yesterday, despite some volatility, as it enjoyed the US Dollar’s (USD) ongoing weakness. 

However, continued dovishness from the European Central Bank (ECB) capped EUR’s gains. In its latest economic bulletin the ECB reiterated its belief that inflationary pressures are temporary. 

This morning, Germany’s full-year GDP for 2021 and the Eurozone’s latest balance of trade figures could cause some movement. Later on, ECB President Christine Lagarde is due to speak. Will she dent the Euro with more dovish comments? 

US Dollar (USD) Slips Further amid Upbeat Trade 

The US Dollar (USD) extended its losses yesterday as the post-CPI sell-off continued, with a risk-on mood also weighing on the safe-haven currency. 

Disappointing US data left the ‘Greenback’ still without support in the afternoon. Both initial jobless claims and the latest Producer Price Index printed below market expectations. 

Among a raft of US data today, retail sales could be the most impactful. Economists expect sales growth to have stalled over the Christmas period, which could weigh on the US Dollar. 

Canadian Dollar (CAD) Wobbles amid Choppy Oil Market 

The oil-sensitive Canadian Dollar (CAD) wavered yesterday, as crude prices experienced some volatility. 

Oil is heading higher today, which may boost CAD. However, there are reports that China will release crude reserves to cool global oil prices, which may limit the upside. 

Australian Dollar (AUD) Rebounds on Mixed Chinese Data 

The Australian Dollar (AUD) initially softened in overnight trade but then managed to regain some losses on mixed Chinese trade data. While Chinese imports fell sharply, exports edged higher, leading to a wider-than-forecast trade surplus. 

New Zealand Dollar (NZD) Drops on Weaker Risk Appetite 

The New Zealand Dollar (NZD) followed the same path as the ‘Aussie’, zigzagging lower through the overnight session as risk appetite weakened. 

Samuel Birnie

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