US Dollar (USD) Firms as Market Mood Sours
The US Dollar (USD) wavered higher yesterday as a downbeat market mood prompted gains for the risk-sensitive American currency.
The minutes from the Federal Reserve’s most recent policy meeting added to USD’s gains. Policymakers sounded hawkish, which fuelled expectations that the Fed will continue hiking interest rates.
Risk appetite could continue to drive USD movement today. The second reading of fourth-quarter US GDP growth could also impact the ‘Greenback’ if it differs from initial estimates.
Pound (GBP) Wavers in Absence of Data
The Pound (GBP) traded without a clear directional bias yesterday amid a lack of UK economic data.
Sterling did seem to enjoy some continuing tailwinds from the previous day’s PMI results, keeping GBP afloat. However, Brexit uncertainty may have prevented an upside for the UK currency.
This morning, Bank of England (BoE) policymaker Catherine Mann is due to deliver a speech. Her comments could support Sterling, as Mann has expressed hawkish views in the past.
Euro (EUR) Mixed amid Russia-Ukraine Concerns
The Euro (EUR) also fluctuated yesterday, moving mostly sideways but posting losses against its stronger peers.
A below-forecast rise in Germany’s business climate indicator could have been a factor in EUR’s lacklustre performance. Meanwhile, Russia-Ukraine woes likely put some pressure on the common currency.
Turning to today, the Eurozone’s final inflation rate reading for January could impact EUR. If the CPI confirms a sharp slowdown, the Euro could stumble.
Canadian Dollar (CAD) Limited as Oil Prices Fall
The Canadian Dollar (CAD) enjoyed modest success yesterday thanks to CAD’s positive correlation with USD. However, a slump in oil prices capped gains for the crude-linked currency.
A forecast decline in wage growth could dent the Canadian Dollar today by increasing expectations that the Bank of Canada (BoC) could cut interest rates later this year.
Australian Dollar (AUD) Recovers despite Headwinds
The Australian Dollar (AUD) recouped yesterday evening’s losses in overnight trade, recovering from a seven-week low against the US Dollar, without a clear catalyst for the movement.
New Zealand Dollar (NZD) Ticks Higher despite Tepid Risk Appetite
The New Zealand Dollar (NZD) also firmed overnight, despite a lack of data and a muted market mood.