Euro Drops following Softer Eurozone Inflation

Euro (EUR) Weakens as CPI Misses Forecasts

The Euro (EUR) fell yesterday following softer-than-expected Eurozone inflation data. While annual inflation printed in line with preliminary estimates, the month-on-month rate cooled more than anticipated.

The common currency also suffered from its negative correlation with the US Dollar (USD) yesterday, as strength in the ‘Greenback’ sapped demand for the single currency.

Later this morning, European Central Bank (ECB) President Christine Lagarde is set to deliver a speech. If the ECB chief strikes a hawkish tone, as she did following the bank’s last rate decision, the common currency could tick higher.

Pound (GBP) Cushioned by BoE Bailey Comments

The Pound (GBP) initially dipped yesterday amid lingering headwinds following the UK’s downbeat jobs data on Tuesday.

Comments from Bank of England (BoE) Governor Andrew Bailey saw Sterling find support later in the session. Bailey acknowledged that second-round effects from rising wages were likely to see inflation stay higher for longer, which may mean more rate rises from the BoE.

Turning to today’s session, the British Pound could see limited movement amid a lack of economic data.

US Dollar (USD) Capped by Improving Mood

The US Dollar enjoyed initial success yesterday. The safe-haven currency was supported by a gloomy market mood and stronger US Treasury yields, which held near a two-week high.

As the day progressed risk sentiment improved, trimming USD’s gains. Treasury yields ticked higher, however, preventing losses for the ‘Greenback’.

A trio of Federal Reserve speeches this afternoon could lend the US Dollar support, if policymakers say that more rate rises are likely.

Canadian Dollar (CAD) Firms as Crude Prices Rise

The commodity-linked Canadian Dollar (CAD) ticked higher yesterday thanks to a rise in oil prices.

Crude could continue to drive CAD trade today, amid a lack of Canadian data. Will ongoing strength in oil see the ‘Loonie’ climb higher?

Australian Dollar (AUD) Hit by Surprise Rise in Unemployment

The Australian Dollar (AUD) tumbled last night after Australian unemployment unexpectedly jumped. The risk-sensitive ‘Aussie’ was able to regain some of these losses amid a bullish market mood, but AUD ended the overnight session lower.

New Zealand Dollar (NZD) Rises amid Risk-Positive Trade

The New Zealand Dollar (NZD) gained ground during last night’s trading session as a risk-on impulse boosted the ‘Kiwi’.

Samuel Birnie

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