Australian dollar (AUD) recovers amid RBA rate hike bets
The Australian dollar (AUD) initially slipped yesterday as concerns of an escalation in the US-Iran war dampened investor appetite for risk.
However, a sharp uptick in Australian inflation boosted Reserve Bank of Australia (RBA) interest rate hike bets, allowing the ‘Aussie’ to recover. The latest monthly inflation gauge from the
Melbourne Institute jumped 1.3% in March, the largest monthly increase on record.
With Australian data absent from the calendar today, market risk appetite could drive AUD. Events in the Middle East could determine the market mood.
New Zealand dollar (NZD) slides as Middle East crisis rattles markets
The New Zealand dollar (NZD) fell yesterday, hitting multi-month lows against some peers, as escalating tensions in the Middle East soured the market mood.
The Reserve Bank of New Zealand (RBNZ) will announce its latest interest rate decision today. While the bank is set to hold rates steady, any hints of future hikes could support NZD.
Pound (GBP) uncertain following mixed PMI
The pound (GBP) traded in a wide range yesterday as markets digested a mixed UK PMI.
The final services survey showed that activity softened to its slowest pace in 11 months in March, although rising price pressures reinforced expectations that the Bank of England (BoE) will raise rates this year.
UK economic data remains in short supply today, potentially leaving GBP to trade without a clear directional bias.
Euro (EUR) supported by hawkish ECB expectations
The euro (EUR) rose against its weaker rivals yesterday, with EUR investors brushing off weak private-sector activity and instead focusing on inflation.
The Eurozone’s final PMI results for March revealed that input prices rose at the fastest pace in over three years, leading markets to price in multiple front-loaded rate increases from the European Central Bank (ECB).
Looking ahead, a recovery in German factory orders in February could support EUR today. However, a forecast contraction in Eurozone retail sales later in the session may offset the upside.
US dollar (USD) weakens despite risk aversion
The US dollar (USD) softened yesterday, with the safe-haven currency unable to draw support from the gloomy market mood.
Concerns about US President Donald Trump’s threats to strike Iranian civilian infrastructure kept USD investors on the defensive, while a sharp decline in US durable goods orders in February also applied some pressure.
Turning to today’s session, market sentiment may be the key catalyst for the safe-haven ‘greenback’. Could ongoing geopolitical fears underpin USD?
Canadian dollar (CAD) choppy as oil fluctuates
The crude-linked Canadian dollar (CAD) wavered yesterday amid oil price volatility. However, CAD ultimately trended lower as a weaker US dollar and downbeat Ivey PMI dragged on the currency.
CAD exchange rates may remain closely tied to oil price movements today. If escalating Middle East tensions see crude climb, the ‘loonie’ may gain ground.
Data releases
12:00 NZD RBNZ Interest Rate Decision
16:00 EUR DE Factory Orders (Feb)
19:00 EUR Retail Sales (Feb)