Australian Dollar (AUD) Dented despite Risk-On Mood
The Australian Dollar (AUD) softened against its peers on Thursday despite a risk-on trading mood, as selling pressure persisted for the second successive day.
Exerting further downside, February’s balance of trade revealed a smaller-than-expected surplus of A$7.457bn. This was the smallest trade surplus since March 2021, largely due to a surge in imports.
Today’s financial stability review from the Reserve Bank of Australia (RBA) may lend support to the ‘Aussie’ – recent commentary from the central bank has been more hawkish as policymakers observe that the domestic economy has remained resilient as spending picks up.
New Zealand Dollar (NZD) Subdued on Lack of Data
The New Zealand Dollar (NZD) weakened yesterday as a lack of domestic data exposed the currency to losses.
A AUD selling bias weighed upon the ‘Kiwi’ alongside reports of continuing supply chain disruption in China. Economic pressures in China weigh upon the antipodean currencies on account of strong trading relationships between Australia, China and New Zealand.
A further lack of data means NZD is likely to trade on external factors today. If diplomatic progress is made between Ukraine and Russia, risk-on tailwinds could buoy the ‘Kiwi’.
Pound (GBP) Fluctuates on Risk Flows; Shell Withdraws from Russia
The Pound (GBP) traded in a narrow range on Thursday as risk-on trading sentiment lent support while a lack of economic data capped Sterling’s gains.
Perhaps lending some support to the Pound was the unveiling of Boris Johnson’s new energy strategy.
Developments in Ukraine are likely to contribute to GBP dynamics today – if yesterday’s Nato meeting results in additional support for Ukraine, Sterling may benefit from fresh risk flows.
Euro (EUR) Climbs on ECB Minutes
The Euro (EUR) found some support yesterday on the minutes from March’s European Central Bank (ECB) meeting.
The minutes revealed that many of the central bank’s governing council members were calling for monetary policy tightening, as inflation is projected to remain above target in 2023, and the three forward guidance conditions for a rate hike have effectively been met.
Risk sentiment could direct EUR exchange rates today, alongside US Dollar (USD) dynamics and further signalling from the central bank.
US Dollar (USD) Bolstered by Hawkish Fedspeak
The US Dollar (USD) enjoyed tailwinds on Thursday as St Louis Federal Reserve President James Bullard argued the case for raising interest rates to 3.5%.
In a hawkish statement given at the University of Missouri, Bullard remarked that even with financial market tightening, the Fed remains behind the curve in its fight against inflation.
Further buoying the ‘Greenback’, initial jobless data revealed that jobless claims fell last week by 34K more than expected.
Looking ahead, market mood is likely to influence USD trading today, with risk-off stimuli drawing potential support to the safe-haven currency.
Canadian Dollar (CAD) Sinks on Lower Oil Price Forecasts
The Canadian Dollar (CAD) tumbled against its peers yesterday as economists revised their short-term oil price forecast to $115 from $135 per barrel.
Today’s employment data might support the ‘Loonie’, if the country’s unemployment rate dropped to 5.3% in March as expected.
Data Releases
Apr 8th AUD RBA Financial Stability Review N/A
Apr 8th CAD Unemployment Rate (Mar) 5.3%
Apr 8th CAD Employment Change (Mar) 80K