Australian Dollar (AUD) Weakens as Commodity Prices Dip
The Australian Dollar (AUD) lost momentum in mid-week trade, as the value of exports weakened according to the Thompson Reuters CRB Index.
The ‘Aussie’ was unable to take full advantage of improving risk sentiment, as scepticism accompanied Russia’s promise to withdraw troops from key regions of Ukraine. The Pentagon suggested that Russia was moving troops around Kyiv instead of withdrawing them.
Tomorrow’s manufacturing data could affect AUD exchange rates – if activity increased in March as expected, the Australian Dollar may enjoy tailwinds.
New Zealand Dollar (NZD) Buoyed by Hopes of Diplomatic Progress
The New Zealand Dollar (NZD) enjoyed support yesterday as bullish trading conditions bolstered perceived riskier currencies.
Despite not-so-encouraging geopolitical headlines, NZD investors remained optimistic that the Kremlin may yet honour its vow to ‘drastically reduce’ military operations in Ukraine.
A lack of NZ data leaves the ‘Kiwi’ to trade on external factors today. If Russian troops withdraw from Kyiv and Chernihiv as promised, risk-on trading may inspire NZD gains.
Pound (GBP) Boosted by Upbeat Market Sentiment
The Pound (GBP) strengthened against several peers on Wednesday as risk-on trading lent upside to the currency.
In spite of dovish remarks from the Bank of England (BoE), Sterling was able to climb on hopes of de-escalation in Ukraine; policymaker Ben Broadbent commented that the Russian invasion had led to substantial rises in the cost of energy and other commodities.
UK GDP data is likely to influence Pound trading today – if Britain’s economy expanded by 1% in the final quarter of 2021 as expected, GBP could enjoy tailwinds.
Euro (EUR) Supported by German Inflation
The Euro (EUR) found some support midweek, as German inflation exceeded expectations.
A preliminary CPI reading suggested a 7.3% rise year-on-year to March 2022, above estimates: European Central Bank (ECB) President Christine Lagarde observed that ‘the longer the war [in Ukraine] lasts, the higher the economic costs will be.’
Employment data for both Germany and the wider Euro area could influence trading today: Germany’s March unemployment rate is expected to remain unchanged, while Euro area unemployment is expected to have fallen in February, lending possible upside.
US Dollar (USD) Demand Suppressed by Risk-On Mood
The US Dollar (USD) tumbled yesterday, as support for the safe-haven currency was diminished by a risk-on trading mood.
ADP employment data revealed that more individuals were employed by private businesses in March than expected, although fewer than in February; meanwhile, finalised GDP data revealed that the US economy grew by 6.9% in Q4 2021.
America’s PCE price index is likely to reveal that inflation grew to 6.5% in February, year-on-year, which may support the ‘Greenback’ as it encourages the Federal Reserve to purse a more aggressive approach to monetary policy.
Canadian Dollar (CAD) Trades Mixed as Oil Prices Rise
The Canadian Dollar (CAD) firmed against some of its peers on Wednesday as oil prices rose; capping gains, however, was uncertainty over demand forecasts amidst fresh COVID-19 restrictions in China.
The Canadian economy is expected to have expanded in January: if today’s data confirms this, CAD could enjoy additional tailwinds.
Data Releases
Mar 31st 16:00 EUR German Retail Sales (Feb) 0.5%
Mar 31st 16:00 GBP Current Account (Q4) £-17.6bn
Mar 31st 16:00 GBP GDP Growth Rate (Q4) 1%
Mar 31st 17:55 EUR German Unemployment Rate (Mar) 5%
Mar 31st 19:00 EUR Unemployment Rate (Feb) 6.7%
Mar 31st 22:30 CAD GDP (Jan) 0.2%
Mar 31st 22:30 USD PCE Price Index (Feb) 6.5%
Mar 31st 22:30 USD Initial Jobless Claims (26/Mar) 197K
Mar 31st 23:00 USD Fed Williams Speech N/A
Mar 31st 23:45 USD Chicago PMI (Mar) 57
April 1st 07:30 AUD Ai Group Manufacturing Index (Mar) 53.5