Pound (GBP) Buoyed amid BoE Rate Hike Bets
The Pound (GBP) gained ground yesterday after the UK’s latest consumer price index came in higher than expected.
Headline inflation remained in double digits at 10.1% while core inflation held steady at 6.2%, boosting the likelihood of another Bank of England (BoE) interest rate rise next month and thereby supporting Sterling.
Turning to today, the Pound’s movement may be more limited. With no UK economic data due out, trading conditions could remain thin.
Euro (EUR) Subdued following Final CPI
The Euro (EUR) struggled on Wednesday as markets responded to the final inflation rate reading from the Eurozone.
The CPI printed as expected, showing a sharp slowdown in headline inflation but a modest uptick in the core rate, causing EUR to waver.
This afternoon, the European Central Bank’s (ECB) meeting minutes could boost EUR, if they reveal a hawkish consensus among policymakers. Later on, an expected improvement in Eurozone consumer confidence could add to EUR’s gains.
US Dollar (USD) Fails to Hold Gains
A risk-off market mood and rising US Treasury yields initially pushed the US Dollar (USD) higher yesterday.
However, USD shed these gains through the second part of the session as a lack of US economic data left the ‘Greenback’ vulnerable to losses.
Looking ahead, an expected rise in jobless claims could dent USD early this afternoon. However, hawkish comments from Federal Reserve officials this evening may help the US Dollar recover.
Canadian Dollar (CAD) Falls as Oil Prices Decline
The Canadian Dollar (CAD) weakened on Wednesday as a drop in oil prices weighed on the commodity-linked ‘Loonie’.
Another drop in oil this morning has put fresh pressure on CAD. If the downtrend in crude persists, the Canadian Dollar may face further losses.
Australian Dollar (AUD) Muted amid Cautious Mood
The Australian Dollar (AUD) softened overnight as a cautious market mood dampened the appeal of the risk-sensitive ‘Aussie’.
New Zealand Dollar (NZD) Plunges as Inflation Cools
Weaker-than-expected inflation data triggered a selloff in the New Zealand Dollar (NZD) last night. Quarterly inflation unexpectedly cooled from 1.4% to 1.2%, rather than rising to 1.7%. In response, traders pared back bets for more Reserve Bank of New Zealand (RBNZ) rate hikes.