Australian dollar (AUD) buoyed by hawkish RBA bets
The Australian dollar (AUD) got off to a positive start this week, continuing to benefit from hawkish expectations for Reserve Bank of Australia (RBA) interest rates.
Yesterday’s uptick came as AUD investors awaited the release of the minutes from the RBA’s February policy meeting, on the expectation that they will reaffirm this hawkish bias.
Unsurprisingly, the publication of the minutes will act as the primary catalyst for the ‘Aussie’ today, with AUD likely to strengthen if they signal broad support among policymakers for further rate hikes.
New Zealand dollar (NZD) sidelined by cautious mood
The New Zealand dollar (NZD) struggled to attract support on Monday as a risk-averse mood led investors to shun the currency.
The ‘kiwi’ is likely to remain sensitive to risk sentiment today, potentially leaving it on the defensive if investors remain cautious.
Pound (GBP) rangebound ahead of key data
The pound (GBP) treaded water at the start of this week as GBP investors braced for a series of high-impact UK economic releases.
This week’s stretch of data will be closely watched by markets as they seek to gauge how aggressively the Bank of England (BoE) will cut interest rates in the coming months.
Today sees the release of the first of this data, with Sterling poised to weaken if the UK’s latest jobs report shows additional signs that the labour market is slowing.
Euro (EUR) muted on weak industrial data
The euro (EUR) was subdued yesterday, following the publication of the Eurozone’s latest industrial production figures.
Data published by Eurostat showed factory output in the bloc slumped from 0.3% to -1.4% in December, slightly ahead of a forecast 1.5% decline but still striking its worst levels since April.
Meanwhile, Germany’s latest ZEW economic sentiment index could revive EUR sentiment today, if it shows morale continued to improve this month.
US dollar (USD) flat amid thin trading conditions
The US dollar (USD) was also confined to a narrow range yesterday as US markets closed for President’s Day, resulting in thin trading conditions for the currency.
This limited the currency’s gains, despite a broadly risk-averse market mood.
Coming up, the release of the New York Empire State manufacturing index could exert pressure on USD today if it reports a decline this month.
Canadian dollar (CAD) demand softens as oil prices stall
The Canadian dollar (CAD) traded with modest losses on Monday as stalling oil prices tempered demand for the commodity-linked currency.
Canada will publish its latest consumer price index later today. If inflation ticked higher again in January, it is likely to cement expectations that the Bank of Canada (BoC) will keep interest rates on hold through 2026 and underpin the ‘loonie’.
Data releases
10:30 AUD RBA Minutes
17:00 GBP Unemployment Rate (Dec)
17:00 GBP Wage Growth (Dec)
20:00 EUR German ZEW Economic Sentiment Index (Feb)
23:30 CAD Inflation Rate (Jan)
23:30 USD Empire State Manufacturing Index (Feb)