Australian Dollar (AUD) Sinks as Commodity Rally Ceases
The Australian Dollar (AUD) fell against the majority of its peers at the end of the week, as the commodity rally that had previously fuelled ‘Aussie’ upside began to wane.
Prices of coal and iron ore dropped, sapping AUD support, while a stronger US Dollar (USD) dampened trading prospects for its rivals. Hawkish forecasts from the Federal Reserve overshadowed bold statements from the Reserve Bank of Australia (RBA) issued earlier in the week.
A lack of data leaves the Australian Dollar to trade on external factors today, such as risk sentiment and the conflict in Ukraine. If progress is made towards a ceasefire agreement, risk-on tailwinds may support AUD.
New Zealand Dollar (NZD) Weakens on AUD Downside
The New Zealand Dollar (NZD) edged down against its peers on Friday as weakness in the Australian Dollar (AUD) weighed upon the ‘Kiwi’.
The ‘Kiwi’ is likely to trade on risk sentiment again today, alongside any further developments in Ukraine. AUD upside may lend support if morale improves in the antipodes.
Pound (GBP) Resumes Downtrend on Central Bank Divergence
The Pound (GBP) fell at the end of the week as a particularly hawkish Federal Reserve highlighted the Bank of England (BoE)’s current dovish stance.
A lack of data left Sterling to trade on external factors – without hawkish central bank rhetoric to lend upside, GBP succumbed to downwards pressure. Cost-of-living concerns also dented the Pound, with 81% Brits worried about their current financial situation.
UK GDP is likely to influence Sterling exchange rates today: if the UK economy expanded in February as expected, GBP could rise – although the narrowness of the increase may cap gains.
Euro (EUR) Inches Higher on ECB Tailwinds
The Euro (EUR) continued to climb on Friday following Thursday’s relatively hawkish policy meeting accounts from the European Central Bank (ECB).
Furthermore, the EU announced new sanctions against the Russian oil and gas sector, as the UK Prime Minister met with German Chancellor Olaf Scholz to discuss Europe’s divestment from Russian energy.
The enforcement of additional sanctions might continue to support the single currency this week – a lack of data today, however, exposes EUR to external factors.
US Dollar (USD) Firms on Fed Optimism
The US Dollar (USD) enjoyed sustained upside against its peers at the end of the week, as investors and economists pored over the latest FOMC minutes.
March’s minutes were deemed hawkish and stoked speculatation that May’s interest rate decision could yield a more aggressive hike of 50 bps, given high inflation levels.
Speeches from Fed policymakers may further elucidate the central bank’s forward guidance today – if the overall tone remains hawkish, the ‘Greenback’ is likely to climb higher.
Canadian Dollar (CAD) Rises on Oil Prices
The Canadian Dollar (CAD) rose against its peers on Friday as crude oil prices resumed their uptrend, with the ‘Loonie’ also benefitting from Canada’s latest jobs report, after they revealed domestic unemployment fell to a record low.
Data Releases
Apr 11th 16:00 GBP UK GDP (Feb) 0.3%
Apr 11th 16:00 GBP Industrial Production (Feb) 0.4%
Apr 11th 23:30 USD Fed Bostic Speech N/A
Apr 11th 23:30 USD Fed Bowman Speech N/A
Apr 12th 02:40 USD Fed Evans Speech N/A