Australian Dollar (AUD) Undermined in Bearish Trade
The Australian Dollar (AUD) found itself on the defensive through Tuesday’s trading session as a risk-off mood prevailed.
This downbeat mood appeared linked to heightened geopolitical tensions and expectations for further monetary tightening from the US Federal Reserve.
Looking ahead, Australia’s latest wage price index will be in focus for AUD investors today. Will another rise in wages lift inflation expectations and boost Reserve Bank of Australia (RBA) rate hike bets?
New Zealand Dollar (NZD) Falters ahead of RBNZ Rate Decision
The New Zealand Dollar (NZD) stumbled yesterday as NZD investors braced for the Reserve Bank of New Zealand’s (RBNZ) impending interest rate decision.
A 50bps hike is largely priced in, leaving the focus on the RBNZ’s forward guidance. Will a dovish outlook from the bank lead the ‘Kiwi’ to extend its losses?
Pound (GBP) Soars on Upbeat PMIs
The Pound (GBP) skyrocketed on Tuesday, with the GBP/AUD exchange rate climbing over 1% following the UK’s latest PMIs.
February’s preliminary figures reported the UK’s private sector returned to growth for the first time in six months. The surprising resilience of the service sector also helped to bolster Bank of England (BoE) rate hike expectations.
However, in the absence of any notable UK data today, the Pound could struggle to consolidate these gains.
Euro (EUR) Muted following Putin Speech
The Euro (EUR) was subdued overnight on Tuesday as EUR investors remained cautious following a speech from Russian President Vladimir Putin in which he vowed to continue his war in Ukraine.
This overshadowed the publication of the Eurozone’s own PMI figures, which reported private sector activity in the bloc struck a nine-month high.
Turning to today’s session, the focus for EUR investors will be on Germany’s latest Ifo business climate index. Will another improvement in business confidence help the Euro to rebound?
US Dollar (USD) Strengthens amid Risk-Off Impulse
The US Dollar (USD) trended higher yesterday as a risk-off bias bolstered the appeal of the safe-haven currency.
Aiding USD’s ascent was the latest S&P PMIs, which surprised to the upside and reported US private sector growth rebounded this month.
In the spotlight today will be the publication of the minutes from the Federal Reserve’s February policy meeting. This could propel the US Dollar higher if they signal the Fed will continue to hike rates in the coming months.
Canadian Dollar (CAD) Sinks following Inflation Miss
The Canadian Dollar (CAD) plunged on Tuesday following the release of Canada’s latest consumer price index. A larger-than-expected drop in inflation was seen as confirming the Bank of Canada (BoC) is done with its current hiking cycle.
Looking ahead, movement in the commodity-linked ‘Loonie’ is likely to be tied to oil price dynamics. Will further price weakness pull CAD exchange rates lower?
Data Releases
Feb 22nd 07:45 NZD Balance of Trade (Jan) NZ$-1.405bn
Feb 22nd 10:00 AUD Wage Price Index (Q4) 3.5%
Feb 22nd 11:00 NZD RBNZ Interest Rate Decision 4.75%
Feb 22nd 19:00 EUR German IFO Business Climate (Feb) 91.2
Feb 23rd 23:30 USD FOMC Minutes