Pound (GBP) Tumbles amid Rate Hike Recession Fears
The Pound (GBP) saw notable volatility yesterday, spiking then slumping after the UK’s consumer price index came in hotter than forecast.
Most notably, core inflation shocked markets by jumping to a fresh 31-year high. While this prompted bets on a 50bps hike from the Bank of England (BoE), it also raised fears that the BoE may need to push the UK into a recession to tame stubborn inflationary pressures.
Today, the BoE decision is in focus. While a hawkish hike may boost Sterling, recession anxiety could temper GBP’s gains.
Euro (EUR) Buoyed by Hawkish ECB Comments
Recent hawkish comments from European Central Bank (ECB) rate setters provided ongoing support for the Euro (EUR) yesterday. Recently, multiple policymakers have signalled further tightening from the ECB.
However, a lack of notable Eurozone data may have limited the common currency’s movement.
Looking ahead, the Eurozone’s latest consumer confidence report is due out this afternoon. A slight improvement could lend EUR modest support, with any unexpected results likely to spark more significant movement.
US Dollar (USD) Finds Limited Success amid Tepid Market Mood
The safe-haven US Dollar (USD) saw mixed movement yesterday, gaining against some of its weaker rivals, amid a lukewarm market mood.
Adding to the uncertainty, markets were struggling to gauge the Federal Reserve’s potential path for monetary policy after its recent rate hike pause. Fed Chair Jerome Powell’s testimony to the US Senate prompted some hesitancy among USD bulls.
The latest US jobless claims figure could dent USD this afternoon, if claims remain elevated as expected. Powell’s second day of testimony could also impact the ‘Greenback’. Will hints at further hikes lift USD?
Canadian Dollar (CAD) Climbs on Strong Sales and Rising Oil
The Canadian Dollar (CAD) firmed against all but its strongest peers yesterday as a far larger-than-forecast recovery in retail sales and climbing oil prices supported the crude-linked ‘Loonie’.
A lack of notable Canadian data through today’s session may see crude continue to affect CAD, with a drop in prices this morning potentially denting the currency.
Australian Dollar (AUD) Falls amid Risk-Averse Trade
The Australian Dollar (AUD) stumbled overnight as a downbeat market mood dented the risk-sensitive currency.
New Zealand Dollar (NZD) Slips as Sentiment Sours
The bearish tone also weighed on the riskier New Zealand Dollar (NZD), with the ‘Kiwi’ falling despite better-than-expected trade data.