Australian Dollar (AUD) subdued by Chinese Covid Concerns
The Australian Dollar (AUD) fell at the beginning of the week as rising Covid cases in China weighed upon the currency.
Due to the countries’ strong trading relationship, headwinds in China often subdue the Australian economy. Also extending downside were Friday’s dovish-sounding comments from Reserve Bank of Australia (RBA) Governor Philip Lowe.
Looking ahead, today’s RBA minutes may affect trading – if the minutes likewise strike a cautious tone, the ‘Aussie’ may come under increased pressure.
Pound (GBP) Supported by Risk-On Tailwinds
The Pound (GBP) rose against several of its peers yesterday, as risk-on tailwinds buoyed GBP trading sentiment.
Further peace talks between Ukraine and Russia lent upside support on hopes of diplomatic progress: Ukrainian negotiator Mykhailo Podolyak said that Russia is beginning to talk constructively, declaring that results may be achieved in a matter of days.
Into today, UK employment data is likely to inspire Sterling movement – if unemployment fell in January as expected, GBP could enjoy additional support.
Euro (EUR) Bolstered as USD Comes under Pressure
The Euro (EUR) benefitted on Monday from downside in the US Dollar (USD), as a result of the strong negative correlation between the two currencies.
Germany’s wholesale prices grew by less than expected – though still rose to a record peak of 16.6 percent in February 2022; also buoying the single currency, German 10-year Bund yields climb to fresh tops past 0.35%, an area last visited back in November 2018.
German economic sentiment could influence EUR exchange rates today – if the ZEW index falls as sharply as expected, the Euro may tumble.
US Dollar (USD) Loses Safe-Haven Appeal
The US Dollar slumped at the beginning of the week, as risk-on sentiment drew support away from the safe-haven currency.
The ‘Greenback’ also tumbled due to a lack of data – although loses were capped by optimistic Fed expectations: markets have priced in a 25 bps hike for next week, and more broadly, around 165 basis points of tightening this year.
Looking ahead, movement in the US Dollar may be limited today, with USD investors reluctant to make any aggressive bets ahead of the Fed’s rate decision on Thursday.
Canadian Dollar (CAD) Trades Mixed on Falling Oil Prices
The Canadian Dollar (CAD) traded in a mixed range against its currencies yesterday as risk-on tailwinds lent support while tumbling oil prices capped gains.
WTI prices reversed from a fresh 14-year high as the black gold reacted to markets’ increased optimism over the Russia-Ukraine peace talks.
New Zealand Dollar (NZD) Wavers on Lack of Data
The New Zealand Dollar (NZD) traded fairly level on Monday despite a lack of significant data, as risk-on tailwinds lent upside. On the other hand, AUD downside weighed upon the ‘Kiwi’ on account of the currencies’ close trading relationship.
Current account data could extend some support today, as New Zealand’s deficit is expected to narrow.
Data Releases
Mar 15th 10:30 AUD RBA Meeting Minutes N/A
Mar 15th 17:00 GBP Unemployment Rate (Jan) 4%
Mar 15th 17:00 GBP Employment Change (Dec) 23K
Mar 15th 20:00 EUR Industrial Production (Jan) 0.1%
Mar 15th 20:00 EUR ZEW Economic Sentiment (Mar) 15
Mar 15th 20:00 EUR German ZEW Economic Sentiment (Mar) 10
Mar 15th 22:30 USD PPI (Feb) 0.9%
Mar 16th 07:45 NZD Current Account (Q4) NZ$-6.213B