Pound (GBP) rallies as markets pare back rate cut bets
The Pound (GBP) leapt yesterday following stronger-than-forecast British jobs data.
The UK unemployment rate unexpectedly ticked lower in the three months to December, while wage growth didn’t slow as fast as anticipated. This dented Bank of England (BoE) interest rate cut bets, thereby boosting GBP.
This morning, the Pound has relinquished most of yesterday’s gains after the UK’s consumer price index fell short of expectations. Rather than rising, as forecast, UK inflation held at 4% last month, fuelling bets on a coming BoE rate cut.
Euro (EUR) supported by positive German outlook
The Euro (EUR) firmed against its weaker rivals on Tuesday after Germany’s latest economic sentiment index exceeded forecasts, hitting a one-year high.
However, this wasn’t enough to prevent the single currency from losing ground against its stronger peers.
Today, the Eurozone’s second estimate for fourth-quarter GDP could impact the Euro. However, only a revised result is likely to cause movement.
US Dollar (USD) skyrockets as inflation beats forecasts
The US Dollar (USD) charged higher yesterday afternoon in the wake of a hotter-than-expected US consumer price index.
American headline inflation eased less than forecast last month while core inflation unexpectedly held steady. This saw market odds on a march rate cut from the Federal Reserve drop from 16% to 8.5%.
Looking ahead, US data is thin on the ground today. As a result, market risk appetite could drive the safe-haven ‘Greenback’.
Canadian Dollar (CAD) unclear despite strong oil prices
The crude-linked Canadian Dollar (CAD) was mixed yesterday. While an uptick in oil prices lent CAD support, the currency still suffered losses against its stronger counterparts.
Today, Canadian economic data remains in short supply. Therefore, the ‘Loonie’ could trade without a clear direction once again.
Australian Dollar (AUD) recovers despite lack of data
The Australian Dollar (AUD) managed to rebound overnight, having fallen sharply yesterday, without a clear catalyst for AUD’s movement. Bets on ongoing restrictive policy from the Reserve Bank of Australia (RBA) may have underpinned the ‘Aussie’.
New Zealand Dollar (NZD) rises on RBNZ expectations
Likewise, the New Zealand Dollar (NZD) firmed last night without a clear fundamental driver of the movement. Hawkish Reserve Bank of New Zealand (RBNZ) expectations could have supported NZD.