Euro Nosedives as Tensions with Russia Flare

Australian Dollar (AUD) Retreats amid Downbeat Mood

The Australian Dollar (AUD) retreated yesterday, falling victim to a prevailing risk-off mood.

This came as markets were unsettled by the war in Ukraine, concerns over China’s Covid lockdowns and growing fears of a global recession.

In the absence of any major AUD data releases today, the ‘Aussie’ could be left to trend lower through the end of the week if the gloomy mood persists.

New Zealand Dollar (NZD) Slumps in Risk-Off Trade

The New Zealand Dollar (NZD) also slumped on Thursday, with investors steering clear of the risk-sensitive ‘Kiwi’ as the mood soured.

Expect these losses to be extended through to the end of the week if markets remain cautious.

Pound (GBP) Firms Despite Underwhelming GDP Release

The Pound (GBP) firmed through yesterday’s European session, with the currency quickly shaking off the losses which followed the UK’s lacklustre GDP figures.

This uptick in Sterling appeared to be underpinned by comments from Bank of England (BoE) policymaker Dave Ramsden, as he suggested the bank ‘hasn’t yet gone far enough on rate hikes’.

Looking ahead, the Pound may be vulnerable to losses today as ongoing Brexit uncertainty likely takes its toll on the currency.

Euro (EUR) Tumbles on Russia Fears

The Euro (EUR) was met by considerable selling pressure on Thursday, with investors shunning the currency amid fresh fears over Russian aggression.

This came after Moscow claimed that Finland’s plans to join NATO is ‘definitely’ a threat to Russia, with Dmitry Medvedev, warning the decision increases the risk of nuclear war in Europe.

Looking ahead, the Euro could face additional headwinds as the Eurozone’s latest industrial production figures are expected to report a sharp slump in factory output in March.

US Dollar (USD) Bolstered by Aggressive Fed Rate Hike Bets

The US Dollar (USD) struck higher against the majority of its peers yesterday, being bolstered by risk-off flows in additional to aggressive Federal Reserve interest rate hike bets.

Despite Fed Chair Jerome Powell dismissing speculation of a 75bps rate hike next month, it appears that an increasingly number of USD investors are betting the Fed will need to accelerate its monetary tightening.

Looking ahead to the end of the week, could the US Dollar’s bullish momentum be upset by the publication of the University of Michigan’s latest US consumer sentiment index? Which is expected to have dropped this month amid inflation concerns.

Canadian Dollar (CAD) Muted as Oil Prices Fall

The Canadian Dollar (CAD) trended lower on Thursday, with a drop in oil prices taking some of the shine off the commodity-linked ‘Loonie’.

If crude prices continue to decline today, then we can expect to see CAD exchange rates continue to soften.

Data Releases

May 13th 19:00 EUR Industrial Production (Mar) -2%
May 14th 00:00 USD Consumer Sentiment (May) 64


Mathew Andrews