Australian dollar (AUD) slides in downbeat trade
The Australian dollar (AUD) slumped on Friday amid a notable decline in market risk appetite.
This came as investor sentiment was undermined by the prospect of US interest rates not falling at the rate that was previously expected, which could place more pressure on global growth.
Turning to this week, a quiet start to the week in terms of domestic data could limit movement in the ‘Aussie’.
New Zealand dollar (NZD) pressured by cautious mood
The New Zealand dollar (NZD) also ran afoul of the decline in risk appetite at the end of last week, with the ‘Kiwi’ posting losses against the majority of its peers.
With NZD data thin on the ground this week, movement in New Zealand dollar is likely to remain tied to market risk flows, potentially leading to further losses if sentiment remains downbeat.
Pound (GBP) knocked by BoE Bailey comments
The Pound (GBP) retreated at the end of last week in response to comments from Bank of England (BoE) Governor Andrew.
Hot off the BoE’s dovish interest rate decision earlier in the week, Bailey suggested that interest rate cuts will be ‘in play’ at future BoE policy meetings.
Sterling may extend this selloff into the start of this week if more GBP investors start to price in a June rate cut from the BoE.
Euro (EUR) pressured despite upbeat German business sentiment
The Euro (EUR) also weakened on Friday as a result of European Central Bank (ECB) rate cut bets.
Coupled with the pressure stemming from the euro’s negative correlation with the US dollar, this was more than enough to offset a stronger-than-expected pick up in German business sentiment this month.
Will growing bets on an April interest rate cut leave the euro on the back foot today?
US dollar (USD) soars on easing Fed rate cut bets
The US dollar (USD) closed last week’s session on a positive note as investors trimmed their expectations for the number of interest rate cuts the Federal Reserve may deliver this year.
However, capping the upside in USD exchange rates was a fall in US Treasury yields.
The US dollar may maintain this momentum into this week as well, so long as market risk appetite remains weak.
Canadian dollar (CAD) firms despite oil weakness
The Canadian dollar (CAD) ticked higher on Friday, as the currency’s positive correlation with the US dollar allowed it to shrug off a drop in oil prices.
In the absence of any notable domestic data, will oil price dynamics have a greater impact on the ‘loonie’ today?