Pound (GBP) Sinks as CPI Cools Below Forecasts
The Pound (GBP) plunged yesterday following the release of January’s CPI data, which printed below expectations.
As both headline and core inflation dropped significantly, GBP investors pared back their expectations of further monetary tightening. The Bank of England (BoE) may have room to consider a pause in their current cycle, disappointing GBP investors.
With data scarce today, Sterling may continue to trade dismally as investors readjust interest rate hike bets.
US Dollar (USD) Rallies amid Surprise Jump in Retail Sales
The US Dollar (USD) gained ground on Wednesday, as January’s retail sales figures printed at a surprise high.
Coming in at a rise of 3%, above expectations of 1.8%, the US retail sector appeared to be in good health. Beyond this, the data showed a focus on supply-restricted goods, which could fuel further inflationary pressures. As such, USD investors ramped up their expectations for more Federal Reserve rate hikes.
PPI data for January is due to print this afternoon, and it’s forecast to show an uptick. If this prints accurately, rate hike bets may continue to increase and boost USD rates.
Euro (EUR) Undermined by Falling Industrial Production
The Euro (EUR) broadly made gains yesterday, but could have been capped by a larger-than-forecast fall in industrial production.
December’s data showed a sharp slowdown in industrial output, which may have amplified recession anxieties among EUR investors. However, cautious trade kept the safer Euro above water.
With little data due today, the common currency may trade on its negative relationship with the US Dollar. Should USD rally, the Euro may falter.
Canadian Dollar (CAD) Pulled Up by Correlation with USD
The crude-linked Canadian Dollar (CAD) shrugged off sliding oil prices yesterday. Due to its close correlation with the strong US Dollar, the ‘Loonie’ made strides.
A speech from Bank of Canada (BoC) Deputy Governor Paul Beaudry is scheduled tonight. If he strikes a hawkish note, CAD could firm.
Australian Dollar (AUD) Strengthens amid Risk-On Trade
The risk-sensitive Australian Dollar (AUD) gained ground overnight amid an upbeat market mood. This mood allowed the ‘Aussie’ to shrug off an uptick in unemployment levels.
New Zealand Dollar (NZD) Firms on Upbeat Market Mood
The New Zealand Dollar (NZD) rose overnight, as the risk-sensitive ‘Kiwi’ took advantage of a return to bullish trade.