Australian Dollar (AUD) Rises as PBoC Cuts Reserve Ratio
The Australian Dollar (AUD) climbed on Friday as the People’s Bank of China (PBoC) said it would cut the reserve ratio for banks in a move designed to stimulate the economy. As the ‘Aussie’ trades as a proxy for the Chinese economy, this news lifted AUD.
However, predictions of further dovish moves from the Reserve Bank of Australia (RBA) and a downbeat mood capped gains for the Australian Dollar.
A speech from RBA Assistant Governor Christopher Kent could pull the ‘Aussie’ lower today if there are any dovish hints.
New Zealand Dollar (NZD) Bolstered by AUD Correlation
A pullback in risk appetite failed to deter the risk-sensitive New Zealand Dollar (NZD) from rising on Friday.
The ‘Kiwi’ benefitted from its strong positive trading correlation with the Australian Dollar.
With no data release today, NZD is likely to be affected by any shifts in risk appetite.
Pound (GBP) Fluctuates amid Volatile Mood
The Pound (GBP) wavered at the end of last week amid a lack of data, although it managed to tick higher overall without a clear catalyst for the movement.
Gains for GBP were capped by bets on a pause in policy tightening from the Bank of England (BoE), however.
Sterling will see no data today. This could leave GBP vulnerable to external headwinds.
Euro (EUR) Finds Support from Hawkish ECB Rhetoric
Hawkish comments from European Central Bank (ECB) policymakers lent support to the Euro (EUR) on Friday. The remarks came after the ECB’s 50bps rate hike on Thursday.
The single currency was also pushed higher by a risk-off mood. Concerns over the health of the European banking sector capped EUR’s gains, however.
Looking ahead, a further forecast downturn in German PPI could weigh on the Euro.
US Dollar (USD) Pulled Lower by Consumer Confidence Downturn
The US Dollar (USD) fell at the end of last week. Fears of a collapse in the US banking sector weighed on USD, as well as a slump in March’s consumer confidence.
The safe-haven ‘Greenback’ was underpinned by a risk-off mood, however. Bets on another 25bps interest rate hike from the Federal Reserve also lent support to USD.
Looking to today, a lack of data for USD means the currency may be affected by market mood and Fed bets.
Canadian Dollar (CAD) Tumbles as Oil Prices Plummet
A continued sharp downturn in crude oil prices saw the commodity-linked Canadian Dollar (CAD) tumble on Friday. A weaker US Dollar also weighed on the ‘Loonie’.
A lack of data for CAD today is likely to leave it at the mercy of oil price dynamics.
Data Calendar
Mar 20th 08:10 AUD RBA Kent Speech
Mar 20th 17:00 EUR German PPI (Feb) -0.5%
Mar 20th 20:00 EUR Balance of Trade (Jan) €-28.5bn