Pound (GBP) muted as UK wage growth slows
The Pound (GBP) was subdued yesterday as a cooldown in UK wage growth boosted bets on a coming interest rate cut from the Bank of England (BoE).
Average earnings growth eased from 7.2% to 6.6% in the three months to November. As wage inflation is watched closely by the BoE, this slowdown dented GBP.
Sterling has regained the upside this morning following hotter-than-forecast UK inflation data. Headline inflation unexpectedly ticked higher last month, thereby dampening BoE rate cut bets.
Euro (EUR) slips despite positive German data
The Euro (EUR) stumbled yesterday, despite an unexpected rise in Germany’s economic sentiment index for January.
A larger-than-forecast decline in Eurozone consumer inflation expectations may have weighed on EUR. The currency also suffered from its negative correlation with a stronger US Dollar (USD).
The Eurozone’s final inflation rate for December could lend EUR modest support this morning, if it confirms that price pressures ticked higher last month.
US Dollar (USD) strengthens amid risk-off mood
The US Dollar rallied yesterday as investors flocked to the safe-haven currency amid widespread risk aversion.
An uptick in US Treasury yields also boosted the American currency, as markets reined in bets on an aggressive rate cutting cycle from the Federal Reserve.
This afternoon, US retail sales for December could impact the ‘Greenback’. Will an acceleration in domestic sales growth boost USD?
Canadian Dollar (CAD) firms on USD correlation
The Canadian Dollar (CAD) firmed yesterday, with the ‘Loonie’ enjoying its positive correlation to the US Dollar. However, mixed Canadian inflation data seemed to cap the upside.
Today, CAD could continue to trade true to its correlation with USD amid a lack of data. Oil price dynamics could also influence the commodity-linked currency.
Australian Dollar (AUD) slides amid souring mood
The Australian Dollar (AUD) fell to fresh monthly lows last night amid a risk-off market mood and disappointing Chinese data.
New Zealand Dollar (NZD) weakens amid risk aversion
The New Zealand Dollar (NZD) also tumbled lower during last night’s trade, with the gloomy tone dampening demand for the risk-sensitive ‘Kiwi’.