Australian Dollar (AUD) Sinks Following Sustained Uptrend
The Australian Dollar (AUD) ticked down against its peers on Tuesday, as a modest improvement in risk sentiment triggered a downward correction.
AUD came under selling pressure in the Asian session and continued to face headwinds through the European session as investors speculated over whether recent developments may impact the Reserve Bank of Australia (RBA)’s dovish monetary policy outlook.
Into today, RBA dynamics are likely to affect ‘Aussie’ trading, alongside China’s inflation data. If Chinese inflation remains below the People’s Bank of China (PBOC)’s target range, the Chinese Yuan (CNY) – and subsequently AUD – could come under pressure.
Pound (GBP) Wavers as Improved Risk Sentiment Lends Support
The Pound (GBP) was buoyed yesterday by an improvement in risk sentiment, as Russia and Ukraine agreed on humanitarian corridors for civilians fleeing Sumy to enter other parts of Ukraine.
Risk-on gains were capped, however, as Russian jets continued to drop bombs overnight near the Ukrainian capital of Kyiv. The UK’s cost-of-living crisis also weighed upon Sterling sentiment, as UK households face the biggest income decline since the mid-1970s.
A lack of data leaves the Pound to trade on external factors today. If Russia continues to target Ukraine with increasing aggression, GBP could tumble on risk-off sentiment.
Euro (EUR) Gains on EU Bond Issue Plans
The Euro (EUR) benefitted on Tuesday as the European Union revealed that it will unveil a plan this week to jointly issue bonds on a massive scale.
This will help to address significant spending as the bloc copes with the fallout from Russia’s invasion of Ukraine. Also boosting the single currency, German industrial production grew by 2.7% in January – well above expectations.
Looking ahead, the Euro will likely trade today on risk sentiment and US Dollar (USD) dynamics, given a lack of significant domestic data. If the situation in Ukraine worsens, the Euro could face renewed selling pressure.
US Dollar (USD) Retains Safe-Haven Support
The US Dollar clung onto recent gains during yesterday’s European session, as risk-off headwinds persisted despite a marginal uptick in trading sentiment.
US Treasury bond yields rose, supporting the ‘Greenback’, while threats from Russian Deputy Prime Minister Alexander Novak that Russia could cut off its main gas pipe to Germany attracted further support to the safe-haven currency.
US JOLTs data is likely to influence USD trading tomorrow, although the situation in Ukraine will probably remain the most influential factor affecting currency dynamics. If job vacancies remained at 10.925m in January, the US Dollar could climb on an apparently stronger labour market.
Canadian Dollar (CAD) Slides on Weakening Oil Correlation
The Canadian Dollar (CAD) sustained some losses on Tuesday, as the historical link between CAD and energy prices weakened. Without crude prices to lend upside, the ‘Loonie’ tumbled on widespread risk aversion.
New Zealand Dollar (NZD) Fluctuates in Narrow Range
The New Zealand Dollar (NZD) wavered yesterday, amidst a lack of relevant data. While Russian missile strikes in Ukraine continue to limit risk-on trading, a hawkish outlook from the Reserve Bank of New Zealand (RBNZ) continued to cap ‘Kiwi’ losses.
Data Releases
Mar 9th 08:15 AUD RBA Gov Lowe Speech N/A
Mar 9th 09:30 AUD Westpac Consumer Confidence Index (Mar) 99.2
Mar 9th 12:00 AUD RBA Gov Lowe Speech N/A
Mar 9th 18:00 AUD RBA Debelle Speech N/A
Mar 10th 01:00 USD JOLTs Job Openings (Jan) 10.925m