Pound (GBP) Rises despite UK Inflation Fears
The Pound (GBP) managed to strengthen yesterday after UK inflation exceeded forecasts. The hot CPI print saw UK government bond yields rise as markets priced in more rate hikes from the Bank of England (BoE).
However, surging prices also pose a threat to the UK economy. Fears over the country’s cost-of-living crisis may have tempered GBP’s gains.
With no UK data out today, Sterling may trade on risk appetite and domestic news. Could the ‘partygate’ revelations begin to have a bigger effect on the Pound?
Euro (EUR) Mixed in Absence of Data
The Euro (EUR) struggled for a clear direction yesterday amid a lack of major Eurozone data.
A slightly softer US Dollar (USD) may have helped to buoy the single currency, due to EUR’s negative correlation with USD. Meanwhile, a downbeat mood around the Ukraine crisis capped gains.
Turning to today, the European Central Bank (ECB) interest rate decision is in focus. The ECB delivered a hawkish surprise at the last meeting but worries over the Eurozone economy blunted the upside. With the outlook still uncertain, we could see some volatility today.
US Dollar (USD) Slips despite Hot PPI Reading
The US Dollar initially wavered yesterday as a mixed risk sentiment caused the safe-haven currency to wobble.
The ‘Greenback’ then tumbled in the afternoon, despite the US PPI printing higher than expected.
Amid a handful of US data releases today, the latest retail sales report is potentially one of the most important. Will strengthening sales growth boost USD?
Canadian Dollar (CAD) Unsteady as BoC Hikes Rates
The Canadian Dollar (CAD) was inconsistent yesterday, moving in different directions against its peers. This may have been due to CAD investors waiting on the sidelines ahead of the Bank of Canada (BoC) interest rate decision.
The BoC raised interest rates by 50 bps, as expected, boosting the ‘Loonie’ against some of its rivals in the afternoon.
Looking ahead, oil prices could drive movement in the crude-linked currency today.
Australian Dollar (AUD) Softens after Employment Data Miss
The Australian Dollar (AUD) wavered lower overnight following some disappointing Australian jobs data. Economists expected the unemployment rate to drop to 3.9% but instead it held at 4%.
New Zealand Dollar (NZD) Rises following Positive PMI
The New Zealand Dollar (NZD) firmed in overnight trade after New Zealand’s business PMI unexpectedly rose. In addition, an upbeat market mood supported the risk-sensitive ‘Kiwi’.