Australian dollar (AUD) buoyed by hawkish RBA minutes
The Australian dollar (AUD) strengthened yesterday after the Reserve Bank of Australia’s (RBA) latest meeting minutes dampened RBA interest rate cut bets.
A souring market mood then threatened to slash AUD’s gains, but rising commodity prices helped the currency continue to climb.
Risk sentiment could continue driving AUD today. If markets remain worried about the war in Ukraine, the Australian dollar could struggle.
New Zealand dollar (NZD) firms despite risk-off mood
The New Zealand dollar (NZD) also edged higher yesterday, with the ‘kiwi’ shrugging off the risk-off mood and rising in tandem with the ‘Aussie’.
Amid an ongoing lack of New Zealand economic data today, NZD exchange rates may be tied to market risk dynamics. If risk aversion prevails, the ‘kiwi’ dollar may struggle to attract support.
Pound (GBP) falls amid dovish BoE comments
The pound (GBP) stumbled yesterday as worries about the Russia-Ukraine war weighed on the UK currency.
In addition, commentary from some Bank of England (BoE) officials added to Sterling’s downside. The bank warned about the risk of job losses in the coming months, while one policymaker hinted that the BoE could cut rates faster than markets expect.
Looking ahead, GBP investors will be laser-focused on the UK consumer price index due out this evening. With inflation expected to have accelerated last month, the pound could gain ground.
Euro (EUR) pressured amid Russia-Ukraine worries
The euro (EUR) also fell on Tuesday as tensions between Russia and the West flared, with the Kremlin warning that it might consider a nuclear response to Ukraine using US weapons to strike targets within Russian territory.
Later in the session, EUR was able to regain ground against some rivals thanks to a pullback in the US dollar (USD), with which the euro is negatively correlated.
An expected decline in German producer prices could pressure EUR this evening. Later, a speech from European Central Bank (ECB) President Christine Lagarde may influence the euro, with any dovish remarks potentially denting the common currency.
US dollar (USD) wavers despite risk aversion
The US dollar initially strengthened yesterday as the risk-off mood provided the American currency with safe-haven flows.
However, the ‘greenback’ couldn’t sustain its upside, with USD slipping later in the evening following a decline in US Treasury yields.
With notable US economic data absent from the calendar today, risk appetite could drive USD once again. Will ongoing anxiety around the Russia-Ukraine war provide the ‘greenback’ with support?
Canadian dollar (CAD) boosted by hot inflation reading
The Canadian dollar (CAD) leapt higher yesterday evening after Canada’s latest CPI beat forecasts.
Headline Canadian inflation leapt from 1.6% to 2% in October, beating forecasts for 1.9%. This dampened bets on further interest rate cuts from the Bank of Canada (BoC).
There’s no Canadian data due to be published today, which could leave the ‘loonie’ vulnerable to oil price dynamics. Could a fall in prices pressure CAD?
Data releases
17:00 EUR German PPI (Oct)
17:00 GBP Inflation Rate (Oct)
23:00 EUR ECB President Lagarde Speech