Pound (GBP) Falters as Squeeze on Income Continues
The Pound (GBP) faced some selling pressure yesterday as the latest UK data showed that inflation outpaced wage growth in the fourth quarter of 2021.
This added to growing concern over the country’s cost-of-living crisis, with rising prices, higher taxes and interest rate rises hitting UK households.
UK inflation exceeded forecasts this morning but the Pound is slipping. Worries about the squeeze on disposable income seem to be weighing on Sterling again today.
Euro (EUR) Gains as Russian Invasion Fears Recede
The Euro (EUR) firmed against most of its peers yesterday as easing tensions on the Russia-Ukraine border boosted the single currency’s appeal.
Russian President Vladimir Putin displayed a willingness to engage in diplomacy amid reports that Russia would withdraw some troops. An imminent invasion now seems less likely, which cheered EUR investors.
The situation on the Ukrainian border could continue to drive EUR exchange rates today. Will Russia make good on promises to withdraw troops?
US Dollar (USD) Subdued amid Risk-On Mood
The US Dollar (USD) wavered yesterday, trending lower overall, as an improving market mood dented the appeal of the safe-haven ‘Greenback’.
A higher-than-expected PPI print in the afternoon briefly saw USD spike, but it soon slipped back against its riskier rivals.
This afternoon economists expect US retail sales to have recovered in January, which could boost the US Dollar. USD investors will then be looking ahead to the latest meeting minutes from the Federal Open Market Committee (FOMC), due out this evening.
Canadian Dollar (CAD) Stumbles as Oil Prices Slide
The commodity-linked Canadian Dollar (CAD) weakened yesterday as oil prices slumped. With Russia seemingly de-escalating the situation, expectations of a tighter oil supply subsided, causing crude to drop.
Turning to today, forecasters expect Canada’s latest CPI to hold steady at 4.8%. If it overshoots, the prospects of a Bank of Canada (BoC) interest rate rise could increase, which would likely boost CAD.
Australian Dollar (AUD) Firms amid Rising Government Bonds
The Australian Dollar (AUD) strengthened overnight as AUD investors shrugged off China’s poor inflation rate data. Australian government bonds continued rising to a fresh three-year high, underpinning the ‘Aussie’.
New Zealand Dollar (NZD) Wavers on Chinese CPI and Risk-On Mood
The New Zealand Dollar (NZD) was mixed in overnight trade. A softer-than-expected Chinese CPI and an improving market mood caused the risk-sensitive ‘Kiwi’ to waver.