Australian Dollar (AUD) Weakens on Risk-Off Headwinds
The Australian Dollar (AUD) sank against its peers at the end of last week as widespread risk aversion capped trading sentiment.
Morale was dented as Ukraine said the power supply to the Chernobyl nuclear plant had not yet been restored. Military intelligence claimed it was ‘possible’ Russia was preparing an attack on the plant, ‘for which the occupiers will try to shift responsibility to Ukraine.’
A lack of data leaves AUD to trade on external factors today; if tensions continue to escalate between Russia and Ukraine, risk-off downside may subdue the ‘Aussie’ further.
Pound (GBP) Supported by GDP Data
The Pound (GBP) enjoyed tailwinds in Friday’s early European session, as UK GDP printed above expectations at 0.8%. The British economy rebounded in January 2022 from a 0.2% fall in December, marking the strongest growth in 7 months.
All sectors posted solid gains, including services, production and construction. Output in consumer-facing services grew by 1.7% in the month, mainly driven by an increase in food and beverage activities, while all other services also saw growth.
Today’s lack of significant UK data means Sterling will likely trade on continuing international tensions. Any sign of progress in diplomatic talks would buoy risk sentiment, lending potential GBP upside.
Euro (EUR) Upside Capped by Dovish ECB
The Euro (EUR) found some support at the end of last week, as Germany’s finalised inflation rate printed at 5.1% as expected.
This inspired initial upside, as investors hoped that inflationary pressures would trigger hawkish policy action from the European Central Bank – however, a dovish speech from policymaker Francois Villeroy de Galhau left EUR traders disappointed.
A meeting of the Eurogroup may affect the single currency today, alongside developments regarding an EU spending plan. If European Union countries agree to joint bond sales as expected, the Euro could enjoy tailwinds.
US Dollar (USD) Enjoys Risk-Off Tailwinds
The US Dollar (USD) benefitted on Friday from a risk-off mood, as widespread fighting in Ukraine drew support towards safe-haven currencies.
Consumer sentiment preliminaries from the University of Michigan came in below expectations at 59.7 – but this seemed to have little effect on ‘Greenback’ exchange rates. The data represented the lowest reading since November 2011, as sentiment continues to be hurt by falling inflation-adjusted incomes.
The US Dollar will likely trade on developments in Ukraine today, with ongoing aggression from the Russian side attracting possible safe-haven support to USD.
Canadian Dollar (CAD) Jumps on Upbeat Employment Data
The Canadian Dollar (CAD) firmed at the end of last week as the Canadian economy added 336.6K jobs in February. The ‘Loonie’ enjoyed immediate knee-jerk upside as the unemployment rate dropped a full percentage point.
New Zealand Dollar (NZD) Trades Mixed as Risk Sentiment Weakens
The New Zealand Dollar (NZD) traded in a mixed range against its peers on Friday, as a lack of data exposed the currency to losses.
The ‘Kiwi’ seemed unaffected, however, by dovish comments from Reserve Bank of New Zealand (RBNZ) shadow board member, Jarrod Kerr.