US Dollar (USD) Rebounds as Fed Signals More Hikes
The US Dollar (USD) rallied on Friday, recouping much of the week’s losses, after hawkish comments from a Federal Reserve policymaker.
Fed Governor Christopher Waller argued that persistently sticky underlying inflation meant more rate hikes were needed. The ‘Greenback’ surged higher in response.
Market-moving US data is thin on the ground today. As a result, risk appetite could drive the safe-haven US Dollar. Could a recovery in the market mood dent USD?
Pound (GBP) Softens as GDP Pressure Persists
The Pound (GBP) weakened at the end of last week’s trade, as lingering headwinds following the UK’s disappointing GDP report on Thursday continued to pressure the currency.
A souring market mood saw Sterling slip against its safer rivals, while GBP was able to post modest gains against its riskier peers.
Today could bring muted movement ahead of some high-impact data releases tomorrow and Wednesday. Could cooling wage growth and easing inflation see Sterling slump through the first half of this week?
Euro (EUR) Bolstered by ECB Bets
The Euro (EUR) found some success on Friday as markets increasingly priced in the possibility of a 50bps interest rate rise from the European Central Bank (ECB). The higher odds of a half-point hike came following recent hawkish rhetoric from ECB policymakers.
However, EUR struggled to make any notable gains due to its negative correlation with the US Dollar, which rallied.
Later today, ECB President Christine Lagarde is due to speak. If Lagarde sounds more cautious than her colleagues, the single currency could stumble.
Canadian Dollar (CAD) Firms as USD Rises and Oil Holds Strong
The Canadian Dollar (CAD) gained ground at the end of last week as CAD enjoyed its positive correlation to USD. Meanwhile, oil prices held close to recent multi-month highs, thereby further supporting the commodity-linked currency.
Amid a lack of notable Canadian economic data today, USD and oil movements may continue driving the ‘Loonie’.
Australian Dollar (AUD) Flatlines amid Tepid Risk Appetite
The Australian Dollar (AUD) was muted overnight as a lack of economic data and a mixed market mood left the ‘Aussie’ to trade sideways.
New Zealand Dollar (NZD) Stumbles following Downbeat PMI
The New Zealand Dollar (NZD) softened last night after the country’s composite PMI showed that private sector activity fell to its lowest level since January 2022.