US Dollar (USD) Fluctuates on Fed Rate Decision
After holding its ground through the European trading session, the US Dollar (USD) surged in an initial response to the Federal Reserve’s latest interest rate decision.
As was widely expected, the Fed opted for a 50bps hike as it begins to moderate the pace of its monetary tightening, but its suggestion that rates will peak at a higher level than previously forecast gave a shot in the arm to USD.
However these gains proved short lived, after Fed Chair Jerome Powell appeared cautious in his outlook for the US economy.
Coming up today is the release of the latest US retail sales figures. Will a contraction in sales growth apply pressure to the US Dollar later this afternoon?
Pound (GBP) Firms as Inflation Cools
The Pound (GBP) traded with modest gains yesterday, following the publication of the UK’s latest inflation release.
While November’s inflation release printed below expectations, it did little to dent expectations for future interest rate hikes from the Bank of England (BoE).
The BoE is set to deliver its latest rate decision today. A 50bps hike is largely priced in, leaving the focus on the bank’s forward guidance. Will a dovish outlook for 2023 push the Pound lower?
Euro (EUR) Fluctuates ahead of ECB Rate Decision
Trade in the Euro (EUR) was mixed on Wednesday. EUR initially came under pressure after the Eurozone’s latest industrial production release reported a much sharper-than-expected contraction in factory output.
However, the single currency was still able to find support from hawkish European Central Bank (ECB) rate hike bets.
The main catalyst of movement in the Euro today will undoubtedly be the ECB’s interest rate decision. Economists are split on whether the bank will opt for a 50bps or 75bps increase. The latter could turbocharge EUR exchange rates.
Canadian Dollar (CAD) Weakens Despite Oil Price Bump
The Canadian Dollar (CAD) trended lower on Wednesday, with the commodity-linked currency seemingly unable to benefitting from an upswing in oil prices.
Australian Dollar (AUD) Weakens Despite Solid Jobs Report
The Australian Dollar (AUD) weakened overnight on Wednesday, as some disappointing Chinese data weakened the appeal of the China-proxy ‘Aussie’, despite an upbeat Australian employment report.
New Zealand Dollar (NZD) Stumbles as Risk-Off Mood Offsets Upbeat GDP
The New Zealand Dollar (NZD) also trended lower overnight, with a souring market mood dragging on the risk-sensitive ‘Kiwi’ and overshadowing a stronger-than-expected domestic GDP release.