Australian Dollar (AUD) Strengthens as Risk Appetite Improves
The Australian Dollar (AUD) rose against its peers yesterday, shrugging off an unexpected fall in construction work as risk sentiment improved.
Australia’s reopened borders contributed to the more positive outlook, alongside relief that sanctions against Russia didn’t go further.
Looking ahead, a lack of significant data leaves AUD to trade on market mood. If a risk-on sentiment persists, the Australian Dollar may enjoy further tailwinds.
Pound (GBP) Subdued on Warnings from the Bank of England (BoE)
The Pound (GBP) fell midweek on a combination of political tensions and inflationary pressure.
Addressing the Treasury select committee, Governor of the Bank of England (BoE), Andrew Bailey, warned of second-round inflation effects and that markets shouldn’t be too aggressive with their bets for future interest rate hikes.
The Governor is due to speak again today, potentially influencing Sterling movements. If Bailey reiterates his concerns, the Pound may come under additional pressure.
Euro (EUR) Wavers, Finds Support on EU Inflation
The Euro (EUR) managed to cap its losses on Wednesday as a risk-on mood and subsequent USD downside buoyed the currency.
Finalised CPI data confirmed that inflation reached 5.1% in January 2022, lending additional support to EUR. Gains were capped, however, as the Gfk consumer confidence indicator for March revealed that sentiment dropped to -8.1 rather than -6.7 as expected.
A speech from Isabel Schnabel of the European Central Bank (ECB) may affect the Euro tomorrow – if Schnabel strikes a hawkish tone, EUR could receive a boost.
US Dollar (USD) Tumbles on Risk Sentiment
The US Dollar (USD) dipped against several peers yesterday as a strong risk appetite drew support away from the safe-haven currency.
Also weakening ‘Greenback’ sentiment was a lack of significant US data. Amidst muted trading conditions, USD investors were cautious of placing any bullish bets and instead succumbed to a US Dollar selling bias.
US GDP data is likely to influence trading today, alongside employment data. If America’s economy is still recorded as having grown by 7% in the final quarter of 2021, USD may enjoy some upside.
Canadian Dollar (CAD) Supported by Oil Prices, Risk-On Mood
The Canadian Dollar (CAD) firmed against several peers midweek, buoyed by upbeat market sentiment. After an initial slump, oil prices also rebounded, lending additional support.
New Zealand Dollar (NZD) Bolstered by RBNZ Announcement
The New Zealand Dollar (NZD) gained on Wednesday as the Reserve Bank of New Zealand (RBNZ) gave an unexpectedly hawkish press conference.
Alongside raising interest to 1%, the RBNZ signalled interest rates would reach 2.2% by the end of this year and 2.5% by March 2023 – a more aggressive path than the 2.1% and 2.3% seen in November’s projections.
Data Releases
Feb 24th 21:00 GBP CBI Distributive Trades (Feb) 25
Feb 24th 23:15 GBP BoE Gov Bailey Speech N/A
Feb 24th 23:30 USD GDP Growth Rate 2nd est. (Q4) 7%
Feb 24th 23:30 USD Initial Jobless Claims (19/Feb) 235K
Feb 25th 02:00 EUR ECB Schnabel Speech N/A
Feb 25th 02:10 USD Fed Bostic Speech N/A
Feb 25th 03:00 USD Fed Mester Speech N/A