Pound (GBP) Mixed amid Ongoing Political Angst
The Pound (GBP) was mixed yesterday, firming against its weaker rivals thanks to far better-than-expected retail sales data from the Confederation of British Industry (CBI).
However, the UK’s ongoing political trouble and a risk-off market mood pushed GBP lower against some of its peers.
With the Sue Gray report looking like it may not be published until next week, Sterling may be mainly influenced by other domestic UK news, such as Brexit.
Euro (EUR) Slides in Post-Fed Sell-Off
The Euro (EUR) suffered from its negative correlation to the US Dollar (USD) yesterday, as the latter surged higher following the Federal Reserve decision.
Central bank policy divergence also dampened EUR’s appeal. With the Fed set to raise rates in March and the Bank of England (BoE) already hiking, the European Central Bank (ECB) is falling behind.
The key data release in the Eurozone docket today is Germany’s GDP growth rate. Will a contraction in Europe’s largest economy exacerbate EUR’s sell-off?
US Dollar (USD) Climbs following Hawkish Fed
The US Dollar extended its post-Fed upside through yesterday’s session. Following the US central bank’s most recent meeting, Fed Chair Jerome Powell signalled that the bank could start an aggressive hiking cycle in March.
The ‘Greenback’ seemed to have peaked by the afternoon, as a higher-than-expected US GDP growth rate failed to cause much movement in USD.
Amid a handful of US data releases today, the one to watch is the PCE price index. This is the Fed’s preferred measure of inflation, so a high reading would strengthen the case for muscular action from the US central bank.
Canadian Dollar (CAD) Recovers from BoC Hawkish Hold
The Canadian Dollar (CAD) firmed against most of its peers yesterday as it recovered from the Bank of Canada’s (BoC) decision not to raise interest rates the day before. Analysts foresee a rate rise at the central bank’s next meeting.
With no notable Canadian data releases during the European session today, movements in the oil market may drive CAD exchange rates.
Australian Dollar (AUD) Slips on Souring Market Mood
The Australian Dollar (AUD) softened in overnight trade as the risk-sensitive ‘Aussie’ struggled to attract bids amid a cautious market mood.
New Zealand Dollar (NZD) Down in Risk-Off Trade
Likewise, the New Zealand Dollar (NZD) ticked lower overnight, with the prevailing bearish sentiment sapping demand for the riskier ‘Kiwi’.