Euro (EUR) Jumps amid Rumours of a 0.5% ECB Hike
The Euro (EUR) surged higher at the start of yesterday’s session amid reports that the European Central Bank (ECB) will consider a 50-bp rate rise at its meeting tomorrow.
Markets have already priced in a 25-bp move, but sources close to the bank told Reuters that policymakers will consider a larger hike in order to tame surging Eurozone inflation.
Looking ahead, the latest flash Eurozone consumer confidence report could dent the single currency. Economists expect it to reveal a drop in morale.
Pound (GBP) Softens on Mixed Jobs Data
The Pound (GBP) fell against its stronger peers yesterday following the UK’s mixed jobs report.
Although the labour market remains tight, with the unemployment rate holding near a 48-year low, wage growth lags behind inflation as the cost-of-living crisis intensifies. In addition, with little evidence of second-round effects of inflation, the Bank of England (BoE) may not raise rates as high as markets expect.
This morning Sterling stumbled, despite UK headline inflation exceeding forecasts and rising from 9.1% to 9.4%. The downside seems to have come from a 0.1-percentage-point decline in core inflation.
US Dollar (USD) Ticks Lower amid Risk-Positive Trade
The US Dollar (USD) declined yesterday, erasing Tuesday evening’s gains, as an upbeat market mood dampened the safe-haven currency’s appeal.
In addition, a lack of any notable American economic data left the ‘Greenback’ without much support.
US data releases remain thin on the ground today. As a result, risk appetite may continue to be the defining factor in USD exchange rates.
Canadian Dollar (CAD) See-Saws in Line with Oil Prices
The crude-linked Canadian Dollar (CAD) initially slipped at the beginning of yesterday’s session but recovered some losses in the afternoon. The movement came as oil prices dipped before bouncing back.
Today, Canada’s latest inflation rate reading could impact the ‘Loonie’. Economists expect inflation to rise from 7.7% to 8.4%, which may boost Bank of Canada (BoC) interest rate bets.
Australian Dollar (AUD) Wavers Higher amid Mixed Trading Stimuli
The Australian Dollar (AUD) wavered overnight, ticking higher against the majority of its rivals. While hawkish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe and a risk-on mood supported the ‘Aussie’, AUD investors were disappointed that the People’s Bank of China (PBoC) left its loan prime rates unchanged.
New Zealand Dollar (NZD) Firms as Market Mood Improves
The risk-sensitive New Zealand Dollar (NZD) strengthened in overnight trade as a cheery market mood boosted the ‘Kiwi’.