Pound Climbs as BoE Rate Hike Bets Offset Cooler Inflation

• Australian Dollar rises after hawkish RBA comments – Uncertainty over China’s reopening weighs on AUD.
• New Zealand Dollar weakened by gloomy forecasts – NZ economy expected to face three quarters of negative growth.
• Pound bolstered by BoE rate hike bets – Cooler inflation does little to deter markets.
• US Dollar drops ahead of Fed interest rate decision – Tuesday’s inflation data points to smaller rate hike.

Australian Dollar (AUD) Pushed Higher by Hawkish RBA Comments

The Australian Dollar (AUD) rose on Wednesday. Hawkish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe bolstered AUD.

AUD’s gains were tempered by a surge in China’s Covid case levels as the country grapples with its gradual reopening.

If November’s unemployment rate prints unchanged at the forecast 3.4% today it could boost AUD. Although these gains may be tempered by a slump in Chinese retail sales.
New Zealand Dollar (NZD) Slides on Downbeat Growth Forecast

The New Zealand Dollar (NZD) trended lower yesterday after New Zealand’s Half Year Economic and Fiscal Update suggested the country could be facing three quarters of negative growth.

A slower pace of expansion in NZ’s economy could weigh on the currency today if GDP figures print as forecast.
Pound (GBP) Gains as Cooler Inflation Fails to Deter BoE Rate Hike Bets

The Pound (GBP) firmed on Wednesday, following the UK’s consumer price index. November’s inflation rose below forecasts, easing from October’s 41-year high.

The currency remained supported by Bank of England (BoE) interest rate hike bets however, as food inflation continued to rise.

Looking ahead, the BoE’s interest rate decision will be the key focus for markets today. Dovish signals from the central bank could pull GBP lower.
Euro (EUR) Slips as Industrial Sector Struggles

The Euro (EUR) fell against many of its peers yesterday. A fall in October’s industrial production weighed on the single currency.

A weaker US Dollar limited dramatic losses for EUR, however. The currency also found support from European Central Bank (ECB) interest rate hike bets.

The ECB’s interest rate decision and accompanying forward guidance will be the key driver for the Euro today. If the central bank commits to further hikes, then it could see EUR climb.
US Dollar (USD) Falls Ahead of Fed Interest Rate Decision

The US Dollar (USD) slipped at the beginning of Wednesday as markets awaited the Federal Reserve’s interest rate decision. A cautious market mood helped to limit any drastic losses for USD.

USD saw further movement as the day went on. Markets reacted to the central bank’s latest forward guidance and Chair Jerome Powell’s comments.

Looking ahead, a slump in November’s retail sales could weigh on USD today if figures print as forecast.
Canadian Dollar (CAD) Slips Despite Oil Price Rise

The Canadian Dollar (CAD) was initially pulled lower on Wednesday by a weak US Dollar. Rising oil prices limited CAD’s losses, however.

With no significant data today, any movement in the ‘Loonie’ is likely to be tied to oil price dynamics today.
Data Releases

Dec 15th 07:45   NZD   GDP Growth Rate (Q3)   0.9%

Dec 15th 17:00   AUD   Unemployment Rate (Nov)   3.4%

Dec 15th 22:00   GBP   BoE Interest Rate Decision   3.5%

Dec 15th 23:15   EUR   ECB Interest Rate Decision   2.5%

Dec 15th 23:30   USD   Retail Sales (Nov)   -0.1%

Dec 15th 23:45   EUR   ECB Press Conference