Australian Dollar Lifted by Chinese Economic Optimism

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  • Australian Dollar Buoyed by China Stimulus – China to slash taxes in new stimulus drive.
  • Brexit Vote Expected to Result in GBP Volatility – MPs widely expected to reject Brexit deal.
  • US Dollar Gains on Investor Jitters – Uncertainty in currency markets drives safe-haven demand.
  • Euro Muted on German GDP Data – German growth slowed to five-year low.

Australian Dollar Bolstered by Chinese Tax Plans

The Australian Dollar found support yesterday, with markets welcoming a pledge from China’s finance ministry to slash taxes in an effort to spur growth. It’s hoped these measures will help ward off a sharp economic slump in China, fears of which have dragged on market sentiment in recent weeks.

Whether the ‘Aussie’ will be able to hold on to these gains in the face of expected market volatility later today remains to be seen however.

Pound Volatility Ahead?

Unsurprisingly this morning’s Brexit vote in the House of Commons remained the main catalyst for movement in the Pound on Tuesday.

Observers overwhelming expect the vote to end in defeat for the government today, with the resulting fallout and Brexit speculation likely to prompt some significant volatility in Sterling. 

Euro Struggles as German Economic Growth Drops to Five-Year Low

The Euro struggled yesterday following the release of Germany’s 2018 GDP report. While the release suggests that Europe’s largest economy avoided a technical recession in the fourth quarter, it also revealed that growth slowed to just 1.5%, the worst pace of expansion since 2013. 

Today’s session will see the final release of Germany’s December CPI reading, with the Euro likely to remain subdued if inflation is confirmed to have slumped last month as expected.

US Dollar Supported by Market Jitters

The US Dollar edged higher yesterday, with investors favouring the safe-haven currency as they became increasingly skittish ahead of the upcoming Brexit vote. However, slightly dampening the appeal of USD were the latest US PPI figures, with a sharper-than-expected contraction in producer prices increasing concerns that the US economy is slowing. 

The uptrend in the US Dollar may persist today, especially if investors continue to seek safe-harbour in face of volatility in Europe.

Canadian Dollar Rallies as Oil Prices Rise

The Canadian Dollar pushed higher on Tuesday, advancing against most of its peers as Chinese economic optimism and a rebound in crude prices lent support to the oil-sensitive ‘Loonie’.

The continued absence of any notable domestic data may see CAD exchange rates continue to be driven by oil prices on Wednesday as well.

New Zealand Dollar Strengthened by Surging Dairy Prices

The New Zealand Dollar found support overnight on Tuesday, with a robust rise in dairy prices at this week’s dairy auction being welcomed by NZD investors.

However these gains could be relinquished in today’s session should New Zealand retail card spending, often seen as an indicator for overall retail spending, have fallen again in December as expected.

Data Released

January 16th 06:00 GBP Parliamentary Brexit Vote          
January 16th 08:45 NZD Retail Card Spending     -0.4%
January 16th 18:00 EUR Germany Inflation Rate  1.7%
January 16th 20:30 GBP Inflation Rate     2.1%

Post by TorFX

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