Euro (EUR) Slips amid German Recession Worries
Poor German data put the Euro (EUR) under pressure from the start of yesterday’s session.
Industrial production in the Eurozone’s largest economy slumped by 3.1% in December, worse than the expected contraction of 0.7%. This once again raised fears of a German recession, which dampened the common currency’s appeal.
Turning to today, EUR may be vulnerable to external factors amid a lack of Eurozone data. Russia-Ukraine news and the Euro’s negative correlation with the US Dollar (USD) could drive most movement.
Pound (GBP) See-Saws amid Lack of Data
The Pound (GBP) fell yesterday morning as expectations of a coming policy slowdown from the Bank of England (BoE) continued to weigh on the UK currency.
However, Sterling managed to bounce through the second half of the session, recouping losses without a clear catalyst for the movement.
UK data remains thin on the ground today. As a result, the Pound may continue to struggle for a clear direction.
US Dollar (USD) Rises as Market Mood Sours
Amid yesterday’s prevailing risk-off mood, the safe-haven US Dollar strengthened. However, a surprisingly large rise in US economic optimism cheered markets in the afternoon. As risk appetite improved, the ‘Greenback’ trimmed its gains.
This was then compounded by a speech from Federal Reserve Chair Jerome Powell, who sounded less hawkish than USD bulls had hoped.
Today, USD investors will be focusing on a trio of Fed speeches. If they voice their support for a higher-than-anticipated terminal interest rate, USD could firm.
Canadian Dollar (CAD) Firms on Rising Oil and USD
The Canadian Dollar (CAD) ticked higher yesterday, with the currency enjoying its positive correlations with the US Dollar and oil prices – both of which rose.
Today the Bank of Canada (BoC) will, for the first time, publish its meeting minutes. If they confirm that the bank has indeed ended its hiking cycle and does not foresee any future rate rises, this could weigh on CAD.
Australian Dollar (AUD) Firms on China Optimism
The Australian Dollar (AUD) found some success overnight, despite a fairly muted market mood. The upside may have come thanks to AUD’s status as a proxy currency for the Chinese economy, with markets hopeful that Beijing’s easing of Covid restrictions will boost growth this year.
New Zealand Dollar (NZD) Flat amid Thin Trading Conditions
The New Zealand Dollar (NZD) wavered sideways overnight, as a tepid appetite for risk and a lack of data left the ‘Kiwi’ to trade without a clear directional bias.