Euro (EUR) Climbs on ECB Rate Rise Bets
The Euro (EUR) strengthened yesterday, shrugging off some underwhelming Eurozone data. Retail sales in the bloc rose by a mere 0.3% in January, versus the expected 1% rise.
The upside came following hawkish comments from two European Central Bank (ECB) policymakers. Chief Economist Philip Lane indicated that the bank would hike rates again at its May meeting, while his colleague Robert Holzmann called for four more consecutive 50bps rate rises.
This morning, the Euro could catch some bids after German factory orders unexpectedly rose in January.
Pound (GBP) Directionless amid Lack of Data
The Pound (GBP) was mixed yesterday as a lack of notable UK economic data left Sterling to trade without a clear directional bias.
GBP was able to pick up modest gains against some of its weaker peers, perhaps buoyed by residual optimism over the agreement of a new Northern Ireland protocol deal.
British data remains thin on the ground today. Therefore, GBP movement may remain muted.
US Dollar (USD) Undermined by Shrinking Factory Orders
The US Dollar (USD) found success at the start of yesterday’s session as a gloomy mood in markets boosted the safe-haven currency’s appeal.
However, USD trimmed its gains in the afternoon. An improving market mood dented the US Dollar, as did a large contraction in US factory orders.
Today, Federal Reserve Chair Jerome Powell is due to testify in front of Congress. If he signals more interest rate rises to come, the ‘Greenback’ could gain ground.
Canadian Dollar (CAD) Falls amid Dismal PMI Results
The crude-linked Canadian Dollar (CAD) faced headwinds yesterday following a drop in oil prices and a much weaker-than-anticipated PMI report. However, a later recovery in the oil markets limited CAD’s losses.
With no notable Canadian data out today, oil price dynamics may continue to influence the ‘Loonie’.
Australian Dollar (AUD) Drops on Dovish RBA
The Australian Dollar (AUD) slumped in the early hours of this morning after the Reserve Bank of Australia (RBA) delivered a dovish rate hike. The bank signalled that it may be close to ending its tightening cycle, sending the ‘Aussie’ spiralling lower.
New Zealand Dollar (NZD) Ticks Higher amid Risky Trade
The New Zealand Dollar (NZD) enjoyed modest gains during overnight trade, with an improvement in market sentiment supporting the risk-sensitive ‘Kiwi’.