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US Dollar Returns to Stronger Form on Steady Inflation Data

Pound News: Brexit Jitters Leave Sterling on Back Foot

Brexit returned to the forefront of investors’ minds on Monday, with the Conservative government showing fresh signs of division on the matter.

Tory backlash over Chancellor Philip Hammond’s apparent push for a softer form of Brexit added to the sense of political worry, leaving the Pound (GBP) with little in the way of support.

With no change forecast for December’s UK net consumer credit figure GBP exchange rates may struggle to find particular traction today.


Euro News: Hopes of ECB Hawkishness Continue to Mount

Comments from European Central Bank (ECB) Governing Council member Klaas Knot helped to boost the appeal of the Euro (EUR) further, as he called for an end to the quantitative easing program.

With sentiment amongst ECB policymakers appearing to be shifting towards greater hawkishness demand for the single currency remained solid, even as the US Dollar (USD) returned to strength.

EUR exchange rates could see a rough ride today if either the fourth quarter Eurozone gross domestic product or January German consumer price index data fall short of forecast.


US Dollar News: Solid Domestic Data Prompts Rally

The appeal of the US Dollar (USD) recovered somewhat at the start of the week, with investors willing to buy back into the weakened currency once again.

As December’s personal consumption expenditure index was found to be in line with expectations this offered further encouragement to USD exchange rates, although this is unlikely to spur the Federal Reserve to imminent action.

Another strong showing from this afternoon’s US consumer confidence index may keep the US Dollar on a bullish footing, in spite of domestic political concerns.


Canadian Dollar News: Continuation of NAFTA Talks Limit CAD Downside

Oil prices came under renewed pressure as a result of rising US output, although this failed to particularly dent Canadian Dollar (CAD) exchange rates.

While talks over NAFTA failed to reach any final agreement the mood towards the Canadian Dollar improved as the parties committed to continuing attempts at renegotiation, keeping the trade agreement alive for the time being.

However, if the oil market remains in a bearish mood this could have a detrimental impact on CAD exchange rates today.


Australian Dollar News: Lack of Risk Appetite Dents AUD Demand

Faltering market risk appetite dented Australian Dollar (AUD) exchange rates yesterday, with the antipodean currency coming under pressure thanks to the recovery of the US Dollar.

Even so, confidence in the health of the Australian economy nevertheless improved on the back of a more positive Westpac Red Book, which pointed towards solid underlying fundamentals.

The Pound to Australian Dollar (GBP/AUD) exchange rate is likely to gain some ground today as markets brace for the fourth quarter Australian inflation figures.


New Zealand Dollar News: NZD Exchange Rates Soften on Trade Data Anticipation

Demand for the New Zealand Dollar (NZD) naturally diminished as the appeal of higher-yielding currencies dimmed on Monday, losing out to the resurgent US Dollar.

Confidence in the antipodean currency was also limited as investors positioned themselves in anticipation of December’s raft of New Zealand trade data.

As long as market worries over the increasingly protectionist US approach to trade remain heightened NZD exchange rates may struggle to find any real support.


Upcoming Data

Tuesday, 30 January

09:30     UK Net Consumer Credit

10:00     Eurozone Gross Domestic Product

13:00     German Consumer Price Index

15:00     US Consumer Confidence Index

Alastair Archbold

Currency Dealer

01442 892 066

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