Pound (GBP) directionless amid data drought
The pound (GBP) lacked conviction yesterday, with an ongoing absence of economic releases leaving Sterling without a guiding hand.
This saw GBP slip against a number of stronger rivals, while making modest gains versus weaker currencies.
With the UK calendar still largely bare today, the pound may continue to struggle for momentum.
Euro (EUR) pressured by ECB commentary
The euro (EUR) retreated on Wednesday after remarks from European Central Bank (ECB) policymaker Martin Kocher weighed on sentiment.
Kocher suggested that continued euro strength against the US dollar (USD) could dampen inflation, potentially paving the way for additional ECB interest rate cuts.
Attention now turns to the Eurozone’s January economic sentiment index. An expected uptick could help underpin the single currency.
US dollar (USD) stabilises ahead of Fed developments
The US dollar steadied yesterday after striking fresh multi-year lows, trading broadly flat and edging higher against some peers.
USD demand remained muted as markets awaited the Federal Reserve’s policy decision and President Donald Trump’s anticipated announcement of the next Fed Chair, with Jerome Powell yet to be officially replaced.
Looking ahead, the ‘greenback’ could come under renewed pressure if US initial jobless claims show an increase for the latest week.
Canadian dollar (CAD) supported by BoC stance
The Canadian dollar (CAD) firmed on Wednesday after the Bank of Canada (BoC) left interest rates unchanged and expressed confidence that rates were at a neutral level.
However, CAD could encounter resistance later today should Canada’s latest trade data reveal a widening deficit.
Australian dollar (AUD) jumps on commodities and rate expectations
The Australian dollar (AUD) rallied overnight, buoyed by higher commodity prices and growing speculation that the Reserve Bank of Australia (RBA) could raise interest rates at its upcoming meeting.
New Zealand dollar (NZD) advances on inflation outlook
The New Zealand dollar (NZD) also moved higher overnight, with rising inflation expectations at home and spillover from RBA rate hike bets fuelling expectations of tighter policy from the Reserve Bank of New Zealand (RBNZ).
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