US Dollar (USD) Ekes Out Modest Gains as Mood Sours
The US Dollar (USD) rose on Friday, recovering some of its losses from the sell-off earlier in the week, as a risk-off mood boosted the safe-haven ‘Greenback’.
However, the risk averse tone was only mild, and Federal Reserve headwinds lingered. USD found its gains limited and trimmed them later in the session.
Later today, John Williams of the Fed is due to speak. If he echoes his colleagues’ recent comments about downshifting the Fed’s approach to tightening policy, USD could stumble.
Pound (GBP) Rudderless amid Lack of Data
The Pound (GBP) traded without a clear directional bias on Friday amid a lack of notable UK data.
As the market mood soured slightly, following Wednesday and Thursday’s rally, Sterling slipped against its safe peers but found success against riskier rivals.
Looking ahead, this morning’s distributive trades data from the Confederation of British Industry (CBI) is expected to show a decline in retail sales. In the absence of any more impactful data, this could pressure GBP.
Euro (EUR) Fluctuates despite German GDP
The Euro (EUR) slipped on Friday morning amid mixed data. Germany’s final GDP growth rate for the third quarter of this year was upwardly revised, but the country’s consumer confidence indicator missed forecasts.
The downside came as the Euro’s negative correlation to a rising US Dollar hurt the single currency. However, USD dipped in the afternoon, helping EUR recoup some losses.
This afternoon, European Central Bank (ECB) President Christine Lagarde will deliver a speech. The Euro could rise if she suggests that further interest rate hikes are needed.
Canadian Dollar (CAD) Subdued despite Rising Oil Prices
The Canadian Dollar (CAD) struggled on Friday, with a temporary uptick in oil prices failing to lift the crude-linked ‘Loonie’.
Turning to today’s session, oil price dynamics and Canadian government bond yields could drive CAD exchange rates.
Australian Dollar (AUD) Slips as Retail Sales Contract
The Australian Dollar (AUD) dropped steeply in overnight trade. Australian retail sales revealed an unexpected fall in October, while protests against Covid restrictions in China worried investors, thereby hurting the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Drops amid China Protests
The risky New Zealand Dollar (NZD) also dropped overnight, as the prospects of social unrest and surging Covid cases in China sparked widespread risk aversion.