US Dollar (USD) Firms on Fed Rate Hike Bets
The US Dollar (USD) strengthened yesterday, as tailwinds from the Federal Reserve’s hawkish meeting minutes on Wednesday evening continued to lift the currency.
Mixed data dampened the US Dollar. While jobless claims fell, the second GDP growth estimate was revised lower. However, a hawkish Fed speech in the afternoon prompted more USD strength.
Looking ahead, the core PCE price index – the Fed’s preferred gauge of inflation – is in focus. Could evidence that inflation remains sticky further boost the ‘Greenback’?
Pound (GBP) Weakens amid Domestic Worries
The Pound (GBP) struggled yesterday, despite hawkish comments from Bank of England (BoE) policymaker Catherine Mann. As Mann is known as one of the most hawkish rate setters, investors largely shrugged off her calls for more tightening.
Domestic concerns seem to have dragged GBP lower. Food shortages on supermarket shelves and a lack of progress on the Northern Ireland Protocol deal both dented Sterling’s appeal.
GBP ends the week amid a dearth of UK economic data. Therefore, domestic news could continue to drive the Pound today.
Euro (EUR) Undermined by Russia Tensions
The Euro (EUR) was initially muted yesterday, despite the Eurozone’s final CPI reading. Core inflation unexpectedly ticked higher last month, which may prompt more action from the European Central Bank (ECB).
Russia-Ukraine worries put pressure on EUR exchange rates, amid increased attacks along Ukraine’s eastern frontline. Still, the safer single currency managed to firm against its weaker peers as sentiment soured in the afternoon.
Turning to today, the Euro could face headwinds after disappointing German data. Consumer confidence rose less than expected heading into March, while the final estimate for German Q4 GDP growth showed a larger-than-forecast contraction.
Canadian Dollar (CAD) Lifted by Recovering Oil Prices
The Canadian Dollar (CAD) made modest gains yesterday, although the upside was rather bumpy, as a recovery in oil prices pulled the crude-linked currency higher.
With no Canadian economic data due out today, movements in the oil market could continue to influence the ‘Loonie’.
Australian Dollar (AUD) Stumbles amid Cautious Trade
The Australian Dollar (AUD) dropped overnight as a downbeat market mood sapped the risk-sensitive currency’s appeal.
New Zealand Dollar (NZD) Declines as Sentiment Sours
Likewise, the New Zealand Dollar (NZD) slid last night as the gloomy mood dragged the risky ‘Kiwi’ lower.