US Dollar Climbs amid Widespread Risk Aversion

US Dollar (USD) Firms as Caution Sweeps Markets

The US Dollar (USD) marched higher yesterday as a gloomy market mood boosted the safe-haven currency’s appeal.

With China imposing lockdown measures to tackle a resurgence of Covid cases, markets are worried that it could hasten a global economic downturn. Meanwhile, fears of a nuclear incident in Ukraine also troubled markets as Kyiv and Moscow traded blame for shelling near the Zaporizhzhia nuclear power plant.

Risk appetite could continue to drive the US Dollar through most of today’s trade. In the evening, three Federal Reserve officials are due to speak. Could dovish comments see USD relinquish some gains?

Pound (GBP) Subdued in Absence of Data

The Pound (GBP) was mixed yesterday as a lack of notable UK economic data left Sterling to trade without a clear direction.

Meanwhile, markets continued to digest the government’s Autumn Statement from last week. Although Chancellor Jeremy Hunt has restored UK financial credibility, his fiscal plans contained few growth-boosting measures.

This morning, the UK’s latest public sector borrowing figures came in lower than expected. However, lingering concerns about the state of the government finances and the UK economy seem to be preventing any upside in the Pound.

Euro (EUR) Shrugs off PPI Miss to Regain Ground

The Euro (EUR) initially softened yesterday following an unexpected sharp decline in German producer price inflation. The drop could take pressure off the European Central Bank (ECB) to keep raising interest rates and may also be an early sign of recession in Europe’s largest economy.

However, the single currency showed some resilience and was able to regain ground against its weaker peers in the afternoon.

Looking ahead, the latest consumer confidence flash from the Eurozone is due out. Will an expected rise in consumer morale lift the common currency?

Canadian Dollar (CAD) Hit by Slump in Oil

The Canadian Dollar (CAD) dropped yesterday afternoon after a sharp decline in oil prices dragged the commodity-linked currency lower.

Turning to today, a forecast contraction in Canadian retail sales could further hurt the ‘Loonie’. Later on, CAD investors will be watching a speech by Bank of Canada (BoC) Senior Deputy Governor Carolyn Rogers for any policy hints.

Australian Dollar (AUD) Flat amid Thin Trading Conditions

The Australian Dollar (AUD) was muted overnight as a lack of Australian economic data and a tepid market mood left the risk-sensitive ‘Aussie’ to trade without a clear direction.

New Zealand Dollar (NZD) Rises ahead of RBNZ Decision

The New Zealand Dollar (NZD) strengthened in overnight trade as traders were pricing in a jumbo 75bps interest rate rise from the Reserve Bank of New Zealand (RBNZ) at its upcoming meeting.

Samuel Birnie

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