Euro (EUR) Climbs on ECB’s Hawkish Hike
The Euro (EUR) strengthened against many of its peers during Thursday’s session, thanks to a fairly hawkish hike from the European Central Bank (ECB).
The ECB said it expected to raise interest rates ‘significantly further’ at upcoming meetings, with the bank’s President Christine Lagarde suggesting that two more half-point hikes seem likely.
The Eurozone PMIs are also due out today. Economists expect the survey scores to remain unchanged. Any surprise results could have a significant impact on EUR exchange rates.
Pound (GBP) Slumps on Dovish BoE Decision
The Pound (GBP) plunged against the majority of its peers yesterday after the Bank of England (BoE) delivered a dovish interest rate rise.
With the BoE using more cautious language and two policymakers voting to leave rates unchanged, markets scaled back their expectations for further rate hikes. This, along with a risk-off mood and recession fears, weighed on GBP.
After a disappointing UK retail sales release, GBP investors now turn their attention to the flash PMIs for December. Could a deepening service-sector contraction push Sterling lower?
US Dollar (USD) Soars as Rate Hikes Drive Risk Aversion
The US Dollar (USD) surged higher through yesterday’s session as post-Federal Reserve tailwinds and a risk-off market mood supported the ‘Greenback’.
Weaker-than-expected US retail sales trigged a brief, sharp dip in the US Dollar. However, with global markets worrying about higher interest rates, the safe-haven currency quickly regained the upside.
Looking ahead, the US PMIs this afternoon could prompt a further upside in USD. Markets expect an improvement in the services PMI score.
Canadian Dollar (CAD) Buoyed in Spite of Oil Price Weakness
The Canadian Dollar (CAD) rose against some of its weaker peers yesterday, despite declines in oil prices and Canadian government bond yields. The upside seemed to come courtesy of the CAD’s increasingly positive correlation with USD.
Australian Dollar (AUD) Muted Following Weak PMIs
The Australian Dollar (AUD) struggled to attract support overnight on Thursday as AUD investors were dismayed by weaker-than-expected domestic PMI releases.
New Zealand Dollar (NZD) Slumps as Manufacturing Activity Plummets
The New Zealand Dollar (NZD) ticked lower in overnight trade after the latest BusinessNZ PMI reported growth in New Zealand’s manufacturing sector plunged to its worst levels since April 2020.