Pound (GBP) Dented by Fall in Real Wages
The Pound (GBP) fell against most of its peers yesterday, despite a mostly upbeat jobs report, as a drop in real wages weighed on the currency.
Inflation outpaced earnings in November, with many commentators arguing that this is just the start of the UK’s impending cost-of-living crisis.
UK inflation beat forecasts this morning, rising to a near 30-year high of 5.4%. This may boost the Pound today, although gains could be limited as markets have already largely priced in a Bank of England (BoE) rate rise next month.
Euro (EUR) Struggles despite German Data Smashing Forecasts
The Euro (EUR) slipped yesterday, with EUR investors seemingly unimpressed by Germany’s ZEW economic sentiment index exceeding forecasts. This may have been due to the accompanying current conditions indicator, which fell to its worst level since May 2021.
In addition, a stronger US Dollar (USD) and central bank policy divergence could have added to the pressure on the Euro.
With Eurozone data thin on the ground today, the single currency could be mostly influenced by USD movements and market mood.
US Dollar (USD) Gains on Treasury Yields and Risk-Off Mood
The US Dollar (USD) gained ground yesterday as US Treasury yields held near a two-year high, despite wavering somewhat.
Risk aversion also boosted the safe-haven ‘Greenback’, as prospects of coming rate hikes weighed on the market mood.
With no notable data releases from the US today, market sentiment could drive most movement in USD.
Canadian Dollar (CAD) Muted as Oil Prices Waver
The Canadian Dollar (CAD) was mixed yesterday as crude prices wavered in a narrow range, leaving the oil-sensitive ‘Loonie’ without a clear direction.
Canada’s CPI is the focus for CAD investors this afternoon. Economists expect inflation to edge up to 4.8% ahead of the Bank of Canada’s (BoC) interest rate decision next week. Therefore, the ‘Loonie’ could climb on a strong reading.
Australian Dollar (AUD) Muted by Consumer Confidence Miss
The Australian Dollar (AUD) was fairly flat in overnight trade, holding at multi-week lows as the Westpac consumer confidence index missed forecasts.
New Zealand Dollar (NZD) Firms amid Risk-On Mood
The New Zealand Dollar (NZD) ticked higher overnight as a slight improvement in market mood boosted the risk-sensitive ‘Kiwi’.