Canadian labour data boosts Loonie
Last week, the Pound strengthened against other currency majors in a solid start to 2022. As Omicron fears ease and the Bank of England is on course to normalise monetary policy in the future, Sterling's been offered some opportunity to claim some gains. In the week ahead, BoE policymakers will speak, while Retail Sales, Gross Domestic Product, Industrial Production, Construction Output, Balance of Trade, and Manufacturing Production stats are all due to make their way onto the market.
Hindered by policy divergence
Against the Euro, the Pound traded higher for its fifth consecutive week last week and closed 0.45% stronger, reaching its best level since February 2020. Meanwhile, the common currency moved higher against the US Dollar on Friday following disappointing jobs data out from the US. However, it's unlikely the EUR/USD currency pair will mark significant gains higher given the policy divergence between the US Federal Reserve and the European Central Bank. Following a 5.0% increase in inflation at the close of last year, the ECB has come under some pressure about its forward guidance, meaning the central bank's upcoming meeting on February 3rd could be interesting for EUR investors. ECB President Christine Lagarde will speak in the week ahead, and the central bank will also publish its Economic Bulletin.
Jobs data disappoints
The Pound managed to trade higher for a third consecutive week versus the US Dollar, reaching eight-week highs and closing 0.44% stronger. While the US Dollar managed to start last week off strong, it ended poorly following a disappointing, highly influential Non-Farm Payrolls reading. While the November number was positively revised higher, the December stat came in at just 199K—far below the 400K forecast. Federal Reserve representatives will speak in the week ahead, and highly significant stats relating to US inflation, retail, and confidence will be released.
AUD and NZD
Falling against the Pound
The Pound strengthened against the Australian and New Zealand Dollars last week. The GBP/AUD currency pair reached its highest level since August 2021 and closed 1.5% higher, while GBP/NZD reached its most substantial level since September 2020, closing 1.26% higher.
Overnight, Australian Building Permits data showed a rebound in November, following a contraction in October. New Zealand will also release Building Permits data this week, which had noted a contraction in October as well, but a smaller decline than Australia. Other data out in the week ahead will include Aussie Home Loans, Balance of Trade, and Retail Sales stats.
Canadian labour data boosts Loonie
Sterling managed to climb against the Canadian Dollar last week, reaching its highest level since October 2021 and closing 0.46% higher. However, against the US Dollar, the Canadian Dollar strengthened last week. An upbeat Canadian jobs report showed that 54,000 jobs—twice as many than had been predicted—had been added in December, while US labour market data disappointed. Additionally, the Canadian Unemployment Rate stat reached 22-month lows. The Canadian Dollar hadn't rallied earlier in the week when oil prices climbed, but the news of a strong labour market enabled the Loonie to notch some gains against its US counterpart. Only low-tier data will be released in the week ahead, leaving the Canadian Dollar to fluctuate on other geopolitical developments.