Australian Dollar (AUD) Firms on Risk-On Mood
The Australian Dollar (AUD) rose against its peers midweek, as an improving market mood lent support to the risk-on currency.
Also lending upside were hawkish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe, who remarked that an increase in the cash rate from its record low is ‘plausible’ this year. A generally positive tone in the equity markets supplied further tailwinds.
Looking ahead, a lack of significant data leaves the ‘Aussie’ to trade on external factors today. Another speech from Lowe could provide support tomorrow morning, if the Governor maintains a hawkish tone.
Pound (GBP) Wavers on Lack of UK Data
The Pound (GBP) fluctuated yesterday, gaining against its safe-haven peers but succumbing to losses against risk-on currencies.
Trading sentiment was buoyed by optimistic updates from Ukraine, as President Zelenskiy’s Deputy Chief Of Staff said the country is a ready for a diplomatic solution, and that the Russian demand for neutrality can be discussed.
Turning to today, Sterling will be further exposed to external headwinds – if humanitarian corridors away from Sumy and Irpin prove successful, GBP may enjoy risk-on support.
Euro (EUR) Climbs on Hopes of EU Funding Plan
The Euro (EUR) continued to gain on Wednesday from optimism surrounding proposed EU joint bond sales.
According to Bloomberg, officials are still working out the details on how the debt sales would work and how much money they intend to raise. Elsewhere, EU member states have also pulled together to impose new sanctions against Russian leaders.
Today’s interest rate decision from the European Central Bank (ECB) is likely to provide the greatest trading stimulus for the Euro: if ECB officials strike a hawkish tone regarding monetary policy tightening, the single currency could extend its gains.
US Dollar (USD) Dips, JOLTs Report Surprises
The US Dollar (USD) sank midweek, as fresh risk flows directed support away from safe-haven assets.
JOLTs job openings printed above expectations in the European afternoon session, driving hopes of imminent monetary policy tightening from the Federal Reserve – in a statement last week, Fed Chair Jerome Powell said he would back a 25 bps rate hike at the central bank’s next meeting next week.
Investors will likely be eyeing inflation data today, hoping for further tightening pressure on the Fed. If the CPI prints at 7.9% as expected, USD sentiment may receive a boost.
Canadian Dollar (CAD) Trades Mixed, Benefits from Risk Flows
The Canadian Dollar (CAD) traded narrowly against its peers yesterday, as risk-on support lent upside while a lack of data capped gains.
New Zealand Dollar (NZD) Resists Downside on Upbeat Commodity Prices
The New Zealand Dollar (NZD) was supported on Wednesday by strong commodity prices – although stagflation risks threatened to dampen growing risk appetite.
Today’s business PMI could apply ‘Kiwi’ downside, as manufacturing activity is expected to have fallen in February.
Data Releases
Mar 10th 22:45 EUR ECB Interest Rate Decision 0%
Mar 10th 23:30 USD Inflation Rate (Feb) 7.9%
Mar 10th 23:30 USD Initial Jobless Claims (5/Mar) 216K
Mar 11th 00:30 EUR ECB Macroeconomic Projections N/A
Mar 11th 07:30 NZD Business PMI (Feb) 51
Mar 11th 07:45 AUD RBA Gov Lowe Speech N/A