US Dollar (USD) Rocked by Mixed Inflation Figures
The US Dollar (USD) traded erratically yesterday in the wake of the latest US consumer price index. USD initially rallied in a kneejerk reaction to the stronger-than-expected uptick in headline inflation last month.
However, these gains quickly faded as core inflation continued to fall and the broader jump in CPI was attributed to a spike in energy prices.
Looking ahead, the US Dollar could face resistance later this afternoon as the latest US retail sales figures are expected to report sales growth softened in August.
Pound (GBP) Knocked by Lacklustre GDP
The Pound (GBP) got off to a poor start yesterday, with the currency retreating in response to the UK’s weaker-than-expected GDP figures. July’s figures reported a 0.5% contraction in growth.
However, Sterling was able to claw back the bulk of these losses later in the session, amid a modest improvement in market risk appetite.
UK data is thin on the ground today, potentially leaving the Pound to trade without any clear direction today.
Euro (EUR) Flat Ahead of ECB Rate Decision
The Euro (EUR) traded sideways on Wednesday as EUR investors were reluctant to alter their positions in the single currency ahead of the European Central Bank’s (ECB) impending interest rate decision.
This left the Euro unfazed by the Eurozone’s latest industrial production release, despite July’s figures reporting deeper-than-forecast slump in factory output.
The ECB’s rate decision is centre stage today. The bank is forecast to leave its monetary policy untouched this month. This could trigger a plunge in EUR exchange rates, particularly if the bank signals rates have peaked.
Canadian Dollar (CAD) Underpinned by Positive Oil Prices
The Canadian Dollar (CAD) firmed on Wednesday as the commodity-sensitive currency was supported by an uptick in oil prices.
In the absence of any notable CAD data, it’s likely any movement in the ‘Loonie’ will remain tied to oil price dynamics today.
Australian Dollar (AUD) Rallies on Upbeat Jobs Data
The Australian Dollar (AUD) strengthened overnight on Wednesday as Australia published its latest labour figures.
While unemployment remained unchanged in August. AUD investors welcomed a stronger-than-expected rebound in employment growth.
New Zealand Dollar (NZD) Strengthens in Bullish Trade
The New Zealand Dollar (NZD) also firmed in overnight trade, with the risk-sensitive currency being bolstered by risk-on flows.