US Dollar (USD) rebounds following hot CPI
The US Dollar (USD) leapt higher yesterday following a hotter-than-expected US consumer price index.
American inflation rose from 3.1% to 3.4% in December, versus forecasts of a more modest rise to 3.2%. This saw some traders rein in their bets on aggressive interest rate cuts from the Federal Reserve this year, thereby driving USD higher.
This afternoon, the latest US producer price index is out. Any further signs that US inflationary pressures are stubborn could see the ‘Greenback’ gain further ground.
Pound (GBP) mixed amid risk-off mood
The increasingly risk-sensitive Pound (GBP) was driven by market sentiment yesterday, with Sterling losing ground against its safer peers.
However, GBP found success elsewhere, despite speculation that the Bank of England (BoE) may cut interest rates sooner than anticipated, as inflation is forecast to fall rapidly over the next few months.
This morning, UK GDP beat forecasts to print at 0.3%, showing that the British economy rebounded in November. This could support Sterling through today’s session.
Euro (EUR) rises on ECB rate speculation
The Euro (EUR) firmed on Thursday after the European Central Bank’s (ECB) economic bulletin signalled that the bank was far from considering cutting interest rates.
However, concerns that the Eurozone slipped into a recession at the end of last year continued to stifle EUR’s upside.
Today, ECB Chief Economist Philip Lane is due to speak. If he pushes back on rate cut speculation, like his colleagues in recent days, then the common currency could strengthen.
Canadian Dollar (CAD) wobbles despite strong oil prices
The Canadian Dollar (CAD) wavered yesterday, with the crude-linked currency unable to gain ground despite rising oil prices.
Turning to today, an ongoing lack of Canadian economic data could leave the ‘Loonie’ to fluctuate once again.
Australian Dollar (AUD) wavers following Chinese data
The Australian Dollar (AUD) initially firmed overnight amid slightly better-than-expected Chinese inflation and trade data. However, a gloomy mood saw AUD relinquish its earlier gains.
New Zealand Dollar (NZD) sheds gains amid downbeat mood
Likewise, the New Zealand Dollar (NZD) rose in the wake of China’s latest data releases before falling back again amid the risk-off tone.