Pound (GBP) Wobbles amid Mixed Jobs Report
The Pound (GBP) struggled for a clear direction yesterday following some mixed jobs data. While the UK’s unemployment rate fell by more than expected, this was in part due to a rise in economic inactivity.
Meanwhile, an increase in risk appetite helped support the risk-sensitive Pound and push it higher against its safer peers.
With no UK data due out today, Sterling may trade mostly on risk appetite and Russia-Ukraine news.
Euro (EUR) Stumbles as Economic Sentiment Slumps
The Euro (EUR) faltered yesterday after Germany’s ZEW economic sentiment index suffered a record slump. Investor morale in Europe’s largest economy plunged as the crisis in Ukraine pushes Germany towards a recession.
Meanwhile, central bank divergence may also have weighed on EUR. While the European Central Bank (ECB) has kept rates unchanged, the Federal Reserve and Bank of England (BoE) will likely hike rates today and tomorrow, respectively.
Turning to today, EUR investors may be reluctant to place any aggressive bets ahead of the Fed decision this evening. As a result, the single currency may be subdued.
US Dollar (USD) Softens as Risk Appetite Improves
The safe-haven US Dollar (USD) headed lower against most of its rivals yesterday amid a recovery in the market mood.
However, lockdowns in China capped risk appetite, while rate hike expectations ahead of the Fed decision limited USD’s downside.
We could see some sharp movement in the US Dollar today as markets reposition in preparation for a Fed rate hike. Will we see USD rise and fall in another ‘buy the rumour, sell the news’ scenario?
Canadian Dollar (CAD) Rebounds as Markets Recover
The Canadian Dollar (CAD) initially dipped yesterday but managed to recover in the afternoon as the market mood improved, despite retreating oil prices.
Looking ahead, Canada’s latest CPI could boost the ‘Loonie’ this afternoon. Forecasters expect inflation to rise from 5.1% to 5.5%, which may prompt further rate hikes from the Bank of Canada (BoC).
Australian Dollar (AUD) Firms amid Risk-On Trade
The risk-sensitive Australian Dollar (AUD) strengthened overnight amid a positive market mood after China announced that it would support the economy and maintain growth.
New Zealand Dollar (NZD) Rallies amid Upbeat Sentiment
The New Zealand Dollar (NZD) initially slipped last night after New Zealand’s current account deficit printed wider than expected. However, the ‘Kiwi’ was able to recover thanks to the risk-on impulse in Asian markets.