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US dollar stumbles in bullish trade

Philip McHugh January 14th 2022 - 2 minute read

The US dollar struck lower again during yesterday’s trading session, amidst a prevailing risk-on mood.

Meanwhile, the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1972 and GBP/USD stable at $1.3730. GBP/CAD is rangebound at C$1.7150, while GBP/AUD and GBP/NZD hold steady at AU$1.8837 and NZ$1.9987, respectively.

Coming up, will some lacklustre US economic data extend the US dollar’s through to the end of the week?

What’s been happening?

The US dollar continued to trend lower through the European session on Thursday as a bullish market mood sapped demand for the safe-haven currency.

Reinforcing the downside in the ‘greenback’ yesterday was also the release of weaker-than-expected US initial jobless claims and PPI figures.

In addition to the euro’s negative correlation with the US dollar helping to bolster EUR exchange rates yesterday, the single currency was also supported by comments from European Central Bank (ECB) Vice President Luis de Guindos, in which he admitted ‘perhaps inflation won’t be as transitory as forecast’. 

The pound, meanwhile, struggled to attract support on Thursday amidst growing doubts over Boris Johnson’s premiership as the Prime Minister faced further calls to resign over his role in a rule breaking No10 lockdown party in 2020.

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest GDP figures.

This morning’s release could help to underpin the pound today after reporting economic growth in the UK accelerated by 0.9% month-on-month in November, against forecasts for a more modest 0.4% expansion.

Also scheduled for release this morning is Germany’s full-year GDP report. While 2021’s figures are expected to report a return to growth for the Eurozone’s largest economy last year, the emergence of Omicron could result in growth being a little weaker than forecast, potentially limiting the appeal of the euro today.

Closing out the week will be the publication of the latest US retail sales figures, which are expected to report sales growth stalled in December. Alongside a drop in the University of Michigan’s consumer sentiment index this could see the US dollar end the session on a sour note.

Written by
Philip McHugh

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