US Dollar (USD) Spikes following Strong GDP Growth
The US Dollar (USD) initially strengthened yesterday after US GDP and durable goods orders both exceeded forecasts.
However, the releases also cheered markets, thereby reversing the gains for the safe-haven ‘Greenback’.
The core PCE price index – the Fed’s preferred measure of inflation – is in the spotlight today. Economists expect a slight uptick in monthly inflation, which may prompt bets for more Fed rate hikes. Such an event would likely boost USD.
Pound (GBP) Subdued following CBI Data Miss
The Pound (GBP) was muted during yesterday’s session, as a larger-than-forecast fall in the Confederation of British Industry’s (CBI) distributive trades survey added to concerns about the health of the UK retail sector.
However, expectations of interest rate rises from the Bank of England (BoE) may have kept Sterling from falling further. Markets are pricing in another half-point hike at the bank’s meeting next week.
UK Chancellor Jeremy Hunt will deliver a speech later, laying out his plans for investment and growth. Could a positive reception from markets and investors help to lift the Pound?
Euro (EUR) Falls amid Russia-Ukraine Tensions
Multiple headwinds hit the Euro (EUR) yesterday, including growing anxiety around escalating tensions in the Russia-Ukraine war.
Kremlin spokesperson Dmitry Peskov said that Russia viewed the West’s donation of tanks as ‘direct involvement in the conflict’.
Later this morning, a speech from European Central Bank (ECB) President Christine Lagarde could impact EUR exchange rates. Could a hawkish tone prompt renewed buying for the common currency?
Canadian Dollar (CAD) Recovers as Oil Rises
The Canadian Dollar (CAD) rallied yesterday, recovering a decent portion of Wednesday’s losses. The upside came as rising oil prices lifted the commodity-linked ‘Loonie’.
Amid the ongoing absence of notable Canadian data releases today, crude prices and USD movement could continue to drive CAD exchange rates.
Australian Dollar (AUD) Undermined by PPI Miss
The Australian Dollar (AUD) was subdued in overnight trade. While an upbeat mood supported the ‘Aussie’, a larger-than-forecast slowdown in Australian PPI dented Reserve Bank of Australia (RBA) rate hike bets, thereby offsetting the upside.
New Zealand Dollar (NZD) Supported by Improving Business Confidence
The New Zealand Dollar (NZD) found some success last night after New Zealand business confidence improved much more than forecast this month. However, NZD’s positive correlation with AUD limited its gains.