Australian dollar (AUD) dragged lower by gloomy mood
The Australian dollar (AUD) fell yesterday, hitting multi-month lows against some peers, as fading hopes for a de-escalation in the Middle East soured the market mood.
Amid hostile rhetoric from both the US and Iran, as well as ongoing attacks, market participants grew doubtful that recent talk of peace negotiations would lead to an end to the conflict.
Market risk appetite could determine AUD’s direction today. If US-Iran peace talk hopes continue to fade, the ‘Aussie’ may weaken.
New Zealand dollar (NZD) dips amid cautious trade
The New Zealand dollar (NZD) also trended lower yesterday, as an increasingly anxious tone dampened demand for the risk-sensitive ‘kiwi’.
Turning to today, the ‘kiwi’ could face headwinds after new data showed a decline in consumer confidence in March.
Pound (GBP) limited amid lack of data
The pound (GBP) was largely muted yesterday, although it managed to edge higher against weaker peers, amid a lack of UK data.
Sterling may have drawn modest support after the OECD raised its UK inflation forecast from 2.5% to 4%, reinforcing expectations that the Bank of England (BoE) may raise interest rates this year.
A forecast contraction in UK retail sales in February could weigh on the pound today, particularly if it raises concerns about the health of the British economy even before the impact of the war in the Middle East.
Euro (EUR) falters as German consumer confidence dips
The euro (EUR) slipped against its stronger rivals yesterday as a decline in German consumer confidence weighed on the common currency.
However, EUR was cushioned by hawkish comments from European Central Bank (ECB) policymaker Joachim Nagel, who said the bank could hike rates as soon as April.
Amid a lack of notable Eurozone data in the session ahead, EUR could trade without a clear trajectory today.
US dollar (USD) rises as risk appetite fades
The US dollar (USD) firmed yesterday as an increasingly risk-averse market mood provided USD with safe-haven flows.
The ‘greenback’ may also have garnered support after the OECD said it expects US inflation to hit 4.2% this year, which would likely deter the Federal Reserve from cutting interest rates.
Comments from Fed policymakers could influence USD this morning. Later in the session, a forecast fall in US consumer sentiment could weigh on the ‘greenback’.
Canadian dollar (CAD) undermined by softer inflation forecast
Rising oil prices failed to lift the crude-linked Canadian dollar (CAD) yesterday, as relatively stable Canadian inflation this year could lead to central bank policy divergence.
Oil price movements are likely to be a key driver of CAD movement today. If fading peace hopes see crude climb higher, the ‘loonie’ could find support.
Data releases
07:00 NZD ANZ Roy Morgan Consumer Confidence (Mar)
08:30 USD Fed Miran Speech
09:00 USD Fed Jefferson Speech
09:10 USD Fed Barr Speech
17:00 GBP Retail Sales (Feb)
00:00 USD Michigan Consumer Sentiment (Mar)