US Dollar (USD) Fluctuates as Markets Digest Data
The US Dollar (USD) saw some choppy trade on Friday as markets reacted to the US core PCE price index – the Federal Reserve’s preferred measure of inflation – along with other data releases.
The price index accelerated marginally month on month in December, which may suggest the inflation cooldown could be slowing. However, a larger-than-forecast drop in personal spending could indicate a coming economic downturn, thereby dampening Fed rate rise bets.
Turing to today’s session, a lack of market-moving US economic data could leave the safe-haven ‘Greenback’ to trade in relation to global risk sentiment.
Pound (GBP) Muted as Chancellor’s Speech Falls Flat
The Pound (GBP) was subdued on Friday as a speech from Chancellor Jeremy Hunt failed to cheer GBP traders.
Laying out his plans for growth and investment, Hunt said that tax cuts would have to wait until inflation was under control, which disappointed investors.
Sterling may be on the back foot today amid fresh political uncertainty after UK Prime Minister Rishi Sunak sacked cabinet minister Nadhim Zahawi following a tax scandal. Later in the week, the Bank of England (BoE) decision is in focus. If the bank announces a pause in its tightening cycle, Sterling could slump.
Euro (EUR) Slips Lower as Russia-Ukraine Woes Continue
The Euro (EUR) ended last week’s trade on a sour note as anxiety over the Russia-Ukraine conflict continued.
Russia launched fresh missile and artillery attacks across Ukraine, and large explosions were heard near the Zaporizhzhia nuclear power station. Fears of a further escalation weighed on the Euro.
Today, Germany’s GDP growth rate for the fourth quarter of 2022 is in the spotlight for EUR investors. Economists expect Europe’s largest economy to have stalled, which may weigh on the common currency.
Canadian Dollar (CAD) Enjoys Surprise Upside
The commodity-linked Canadian Dollar (CAD) found success on Friday, despite a drop in oil prices, with no clear catalyst for the movement.
With no Canadian data out today, oil price dynamics may influence the ‘Loonie’.
Australian Dollar (AUD) Slips amid Risk-Off Mood
The Australian Dollar (AUD) softened in overnight trade as a souring market mood dented the appeal of the riskier ‘Aussie’.
New Zealand Dollar (NZD) Buoyed by Trade Data
Meanwhile, the New Zealand Dollar (NZD) avoided losses despite the downbeat mood thanks to better-than-expected trade figures.