Pound (GBP) Dips amid Allegations of Illegal Government Gatherings and Soaring Energy Prices
The Pound (GBP) ticked lower against the majority of its competitors today amid falling confidence in UK Prime Minister Johnson and soaring energy prices. Despite this, Sterling has hit a new two-month high against the US Dollar (USD) following Wednesday’s inflation data.
The political furore surrounding the issue is likely to have undermined confidence in the Pound, as well as reports that energy prices will remain at a high for up to two years.
Looking to the week ahead for GBP, an expected rise in domestic GDP in November could lend some strength to Sterling.
Euro (EUR) Dipped as Covid Cases Across Continent Soar
The Euro (EUR) has dipped against many of its riskier competitors today whilst also hitting its highest point against the US Dollar since November 2021. Record-high levels of Covid-19 infections across the continent could well place pressure on the currency however. Germany, Austria, and Bulgaria have all reported new record-high daily case levels.
Confidence in the Euro may also be dented as inflation in the Eurozone has reached 5%, more than double the European Central Bank’s (ECB) target rate of 2%. ECB President Christine Lagarde was quick to reassure Eurozone citizens that the central bank would do all it could to stabilise prices and combat rising inflation.
Looking to the rest of the week for the Euro, ECB President Christine Lagarde is due to make a speech on Friday which investors will likely be watching closely. A forecast widening of the Eurozone’s balance of trade suplus Friday may offer some support to the Euro.
US Dollar (USD) Tumbles as Inflation Hits 39-Year High
The US Dollar has tumbled against its rivals today following the release of December’s inflation figures. Inflation hit 7%, its highest point since 1982, with soaring fuel and oil prices thought to be some of the key drivers behind the rise. Analysts believe that the country’s should peak by the end of the first quarter of 2022.
The downturn in the US Dollar appeared to be driven primarily by some USD investors pricing in a higher-than-expected inflation reading ahead of its release.
The US Dollar could be pushed upward on Thursday from a forecast rise to PPI figures as well as an expected dip to US jobless claims. Should both print as expected then USD could rise as investors place speculative bets on an early rate rise by the Fed.
Australian Dollar (AUD) Boosted by Rebound in Iron Ore Demand
The Australian Dollar (AUD) has climbed against its rivals today amid rising iron ore prices and a plummeting US Dollar (USD). The rising price of iron ore may has likely helped boost the currency as investors anticipate a rebound in demand later in 2022. AUD may see its gains limited however by high Covid-19 case levels, as the Omicron variant causes severe staff shortages and disruption to supply chains.
With no further significant data for the ‘Aussie’ this week, the currency’s fortunes are likely to be affected by risk appetite, commodity prices, and Covid-19 infection levels.
Canadian Dollar (CAD) Dips as Omicron Spreads Across Country.
The Canadian Dollar (CAD) has dropped against its riskier competitors today amid soaring Covid-19 cases across the country. Losses for the commodity-tied ‘Loonie’ may be underpinned however by rising oil prices, as they hit a two month high on Wednesday.
With no further data releasees for CAD this week, it’s likely that the currency will continue to be affected by rising oil prices and the ongoing increase in Covid-19 cases.