Pound Sterling (GBP)
The Pound has failed to advance against the Euro or US Dollar on Wednesday’s trading session, due to persistent concerns about Brexit and Theresa May’s ability to govern.
Mrs May has come under fire for failing to implement significant change during a recent cabinet reshuffle, which has led some to question how much authority she actually wields.
Although Brexit talks haven’t fully resumed this year, the usual worrying warnings are still circulating about how economically catastrophic a ‘no deal’ Brexit could be for the UK.
The next high-impact UK data will come out on 16th January, consisting of UK inflation rate data for December.
For the basic reading, expectations are for a decline on both the month and the year.
Lower inflation is likely to trigger GBP volatility, as it will have an effect on whether the Bank of England (BoE) considers further interest rate hikes necessary in the near-term.
On the afternoon of 10th January, the Euro has appreciated against the Pound, the US Dollar and the South African Rand.
There hasn’t been much domestic data to refer to today, so Euro traders have instead been looking at World Bank forecasts for 2018.
The bank has given the Euro area an upgrade in its outlook, along with the US and Japan. For the Eurozone, World Bank experts believe annual growth will come in the region of 2.1% this year.
Thursday’s Eurozone data could play into further Euro gains against other currency rivals, as it will consist of high-impact German GDP stats for 2017.
The expectation is that GDP grew overall last year; if this is the case then the Euro could rise further against rivals like the Pound and US Dollar.
US Dollar (USD)
In the aftermath of dovish comments from a Federal Reserve official, the US Dollar has fallen against the Euro and New Zealand Dollar, but risen slightly against the Pound and Canadian Dollar.
The mixed performance has been triggered by remarks from Fed policymaker Neel Kashkari, who has stated that interest rates should stay lower for longer in order to increase inflation.
Kashkari isn’t voting on Fed interest rate decisions in 2018, but his dovish attitude has still unsettled traders ahead of further Fed speeches.
Following on from Kashkari, the US Dollar could be further influenced by remarks from Fed officials James Bullard and William Dudley, speaking today and tomorrow respectively.
As with Kashkari, neither man will be a Fed voting member this year, but both could still shift the US Dollar with strong optimistic or cautious sentiments.
Australian Dollar (AUD)
The Australian Dollar has advanced against the Pound and US Dollar today, although losses have been seen against the New Zealand Dollar and Euro.
The picture on the Australian economy in 2018 has been mixed – on the plus side, economists believe that proposed tax cuts would benefit all of the national economy.
Less supportively, however, there are estimates that job creation could slow over the course of 2018.
The Australian Dollar could rise when Thursday’s early NAB business confidence reading comes out; estimates are for growth from 6 points to 10, indicating greater optimism.
New Zealand Dollar (NZD)
Despite a lack of NZ economic news, the New Zealand Dollar has made substantial gains against the Euro, Pound and US Dollar today.
This strong performance may be down to a converse decline in interest about the US Dollar, caused by recent comments from Federal Reserve officials.
The New Zealand Dollar could be affected by building permits figures out on Thursday evening, if they show a rise from the previous -9.6% reading.
Canadian Dollar (CAD)
Rising crude oil prices have failed to inspire Canadian Dollar traders today, with the CAD instead falling against the Australian Dollar, Euro and US Dollar.
The Canadian Dollar has risen against the Pound, but only by a small amount.
The CAD may rise sharply on 17th January, if the Bank of Canada (BOC) raises national interest rates as the six big Canadian bank believe it will.