Pound (GBP) choppy following jobs data and BoE comments
The pound (GBP) fluctuated yesterday as Bank of England (BoE) Governor Andrew Bailey brushed off some strong UK jobs data.
While wage growth accelerated to an eight-month high in the three months to December, Bailey said this did not change the broader picture on the UK economy and warned of a ‘weak growth environment’.
Sterling could strengthen today after the UK’s latest consumer price index showed a larger-than-forecast rise in inflation , from 2.5% to 3% in January. This could see markets reprice BoE rate cut expectations.
Euro (EUR) slips despite upbeat German data
The euro (EUR) weakened yesterday, despite a larger-than-forecast improvement in Germany’s latest ZEW economic sentiment index.
A recovery in the US dollar (USD) weighed on EUR, due to the currencies’ negative correlation. In addition, fading hopes for peace in Ukraine put some pressure on the euro.
Eurozone economic data is thin on the ground today. Therefore, the single currency could trade without a clear direction.
US dollar (USD) buoyed by rising Treasury yields
The US dollar trended broadly higher during yesterday’s session as rising US Treasury yields gave the ‘greenback’ a boost.
Furthermore, disappointment surrounding the US-Russia talks on Ukraine helped to support the safe-haven currency.
USD exchange rates could potentially see limited movement today as markets await the Federal Reserve meeting minutes this evening.
Canadian dollar (CAD) steady as inflation beats forecasts
The Canadian dollar (CAD) managed to rise against its weaker peers yesterday as Canadian inflation exceeded expectations, causing markets to trim bets on more Bank of Canada (BoC) rate cuts.
Oil price dynamics may drive the commodity-linked ‘loonie’ today amid a lack of economic data from Canada.
Australian dollar (AUD) buoyed by cheery mood
The Australian dollar (AUD) firmed overnight as an upbeat mood in Chinese markets helped lift the risk-sensitive ‘Aussie’.
New Zealand dollar (NZD) rebounds after RBNZ rate cut
The New Zealand dollar (NZD) initially dropped overnight as the Reserve Bank of New Zealand (RBNZ) cut interest rates by 50bps as expected. However, the ‘kiwi’ quickly rallied amid a retreating US dollar and risk-on market mood.
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