Australian Dollar (AUD) ticks higher amid fading RBA rate cut bets
Monday saw the Australian Dollar (AUD) firm against most peers amid diminished Reserve Bank of Australia (RBA) interest rate cut bets.
Analysts at Rabobank suggested that the RBA is likely to keep rates unchanged until the fourth quarter of 2024. As investors pared back their bets on policy loosening, the ‘Aussie’ gained ground.
AUD exchange rates could trade in a wide range today, as investors pore over the latest RBA meeting minutes.
New Zealand Dollar (NZD) lifted by recovering service sector
In January, New Zealand’s service sector returned to growth, boosting the New Zealand Dollar (NZD) during yesterday’s session.
On a monthly basis, activity in the key sector accelerated above forecasts, brightening the country’s economic outlook.
The ‘Kiwi’ may struggle to find its footing today, amid a lack of macroeconomic data releases.
Pound (GBP) pressured by overtightening fears
Yesterday, the Pound (GBP) struggled to find its footing amid concerns over the Bank of England’s (BoE) monetary policy.
Former BoE Chief Economist Andy Haldane suggested the bank needs to begin cutting rates sooner than expected. He argued that tight policy will likely worsen the UK’s recession, which
prompted investors to increase their bets on a rate cut in May, softening GBP’s appeal.
BoE Governor Andrew Bailey is due to speak tonight. If he pushes back against rate cut bets, the Pound could gain ground.
Euro (EUR) undermined by German recession forecasts
Anxieties over Germany’s economic outlook weighed on the Euro (EUR) during Monday’s session.
Bundesbank, Germany’s central bank, commented that the economy was likely to have entered a recession and forecast a further contraction in the first quarter of 2024. This kept EUR exchange rates subdued.
Data for the Euro is scarce today, which could prevent the common currency from finding strength.
US Dollar (USD) quiet amid President’s Day closure
With the country celebrating President’s Day, market closures resulted in limited trade for the US Dollar (USD) yesterday.
However, due to last week’s inflation data demonstrating that price pressures remain sticky, bets on delayed rate cuts from the Federal Reserve kept USD afloat.
Economic releases remain thin on the ground today, which could prompt narrow trade for the US Dollar.
Canadian Dollar (CAD) supported by recovering oil prices
The crude-sensitive Canadian Dollar (CAD) was underpinned by rising oil prices yesterday, despite cooler-than-expected PPI levels.
The latest Canadian inflation data is due to print tonight. The headline rate is forecast to have cooled in January, which could weaken the ‘Loonie’ against its peers.
Data Releases
Feb 20th 10:30 AUD RBA Meeting Minutes
Feb 20th 20:15 GBP BoE Gov Bailey Speech
Feb 20th 23:30 CAD Inflation Rate (Jan) 3.3%