Australian dollar (AUD) tumbles amid geopolitical uncertainty
The Australian dollar (AUD) stumbled out of the gate this week amid risk-aversion triggered by the US and Israeli attacks on Iran.
While the ‘Aussie’ attempted to pare these losses later in the session, its recovery proved short-lived amid a widening of the conflict across the Middle East.
In the absence of any notable domestic data, the ‘Aussie’ may be vulnerable to further losses today if geopolitical uncertainty remains elevated.
New Zealand dollar (NZD) nosedives as risk sentiment evaporates
The New Zealand dollar (NZD) also fell sharply amid considerable risk aversion on Monday.
Movement in the ‘kiwi’ will likely remain tied to market risk dynamics today, likely leaving NZD exchange rates on the defensive.
Pound (GBP) buoyed by hawkish BoE bets
Trade in the pound (GBP) was mixed yesterday amid concerns over the dramatic surge in European energy prices following the effective closure of the Strait of Hormuz over the weekend.
While GBP investors fear rising gas prices could curtail UK economic growth just as it was gaining momentum, the potential inflationary impact also slashed the odds of the Bank of England (BoE) cutting interest rates later this month.
Chancellor Rachel Reeves will deliver her Spring Statement later today. While no major policy announcements are expected, if the accompanying forecasts from the Office for Budget Responsibility (OBR) are revised higher in light of recent data, Sterling may jump.
Euro (EUR) punished by energy price surge
The euro (EUR) was also undermined on Monday by a spike in European energy prices, with continental gas prices surging by around 40%.
Adding to the pressure on the euro was the release of Germany’s latest retail sales figures, which reported a much larger-than-expected contraction in consumer spending at the start of 2026.
The Eurozone’s latest consumer price index will be in focus today. If February’s preliminary figures report inflation remains below the European Central Bank’s (ECB) 2% target, it may start to strengthen the case for a more accommodative policy stance.
US dollar (USD) bolstered by safe-haven demand
The US dollar (USD) raced higher at the start of this week as the dramatic escalation of tensions in the Middle East stoked demand for traditional safe-haven assets.
Aiding the US dollar’s ascent was America’s relative energy independence, which should help to limit the US economy’s exposure to soaring oil and gas prices.
Turning to today’s session, a further appreciation of the ‘greenback’ is likely if we see tensions in the Middle East continue to escalate.
Canadian dollar (CAD) bolstered by rising oil prices
The Canadian dollar (CAD) rallied on Monday, with the commodity-linked currency tracking oil prices higher.
Expect the ‘loonie’ to enjoy further gains through today’s session if oil prices continue to strengthen.
Data releases
20:00 EUR Inflation Rate (Feb)
22:00 GBP Spring Statement