US Dollar (USD) Jumps as Powell Hints at Further Hikes
The US Dollar (USD) rallied yesterday as a souring market mood and hawkish hints from the Federal Reserve sparked fresh interest in the safe-haven currency.
US-China trade tensions and a decline in Chinese industrial profits weighed on risk appetite. Meanwhile, Fed Chair Jerome Powell said a ‘strong majority’ of policymakers see two or more rate hikes by year’s end.
Powell reiterated the Fed’s hawkish stance this morning, which may support the US Dollar as the session unfolds. This afternoon, the latest US jobless claims data is due out. Another high number of new claims could dent USD.
Pound (GBP) Slides amid Cost-of-Living Crunch
The Pound (GBP) fell during Wednesday’s trade as the UK’s economic outlook grew bleaker amid the intensifying cost-of-living crisis.
Predictions that water bills could rise 40% over the coming years troubled GBP investors, as did news that the utility firm Thames Water was likely to collapse.
A lack of UK economic data today could leave Sterling exposed to losses. In the evening, a speech from outgoing Bank of England (BoE) policymaker Silvana Tenreyro could dent the Pound if she expresses concerns over a possible UK recession.
Euro (EUR) Undermined by Weak German Data
The Euro (EUR) managed to gain ground against some of its weaker rivals yesterday, thanks to hawkish comments from European Central Bank (ECB) President Christine Lagarde.
However, the single currency found its upside stifled by downbeat German consumer confidence data. A resurgent US Dollar added to EUR’s headwinds, due to the two currencies’ negative correlation.
Germany’s latest consumer price index could see the Euro gain ground today. An expected uptick in inflation could boost ECB bets.
Canadian Dollar (CAD) Stumbles amid Declining BoC Bets
The Canadian Dollar (CAD) initially slipped yesterday as Tuesday’s cooldown in inflation continued to weigh on the ‘Loonie’. However, an uptick in oil prices and USD helped CAD recoup some losses later in the session.
Turning to today, Canada’s average earnings data is in focus. Could a decline in wage growth further dent Bank of Canada (BoC) interest rate rise bets?
Australian Dollar (AUD) Buoyed by Upbeat Sales Data
The Australian Dollar (AUD) enjoyed support overnight after Australia’s latest retail sales report far exceeded expectations. Growth printed at 0.7%, rather than the forecast 0.1%.
New Zealand Dollar (NZD) Firms as Business Confidence Recovers
The New Zealand Dollar (NZD) also found modest success last night on the back of better-than-anticipated data. Business confidence beat predictions, recovering to its highest level since January 2022.