Australian dollar (AUD) subdued amid mixed market mood
The Australian dollar (AUD) muted through the end of last week’s session amid tepid market risk appetite.
This came amid uncertainty over the Middle East peace process, with the US-Iranian ceasefire appearing increasingly strained, but with Washington striking a positive note ahead of talks in Islamabad.
Expect the ‘Aussie’ to remain sensitive to risk sentiment at the start of this week, with the direction of the currency likely to be tied to progress made in peace talks over the weekend.
New Zealand dollar (NZD) undermined by slowing factory sector
The New Zealand dollar (NZD) softened on Friday as it was pressured by both the cautious market mood and a drop in New Zealand’s latest manufacturing PMI.
This week opens with the publication of New Zealand’s latest services PMI, with the ‘kiwi’ potentially gaining ground if the service sector defied the odds to return to growth last month.
Pound (GBP) strengthens despite bond market turbulence
The pound (GBP) firmed against most of its peers at the end of last week, despite another uptick in UK borrowing costs
Friday’s rise in 10-year gilt yields effectively wiped out the fall seen following the US-Iran ceasefire announcement and raises fresh concerns about how the UK government may fund potential energy support later in the year.
In the absence of any notable UK economic indicators, movement in the pound is likely to be dictated by wider market movements at the start of this week.
Euro (EUR) buoyed by Ukraine-Russia ceasefire
The euro (EUR) trended broadly higher through Friday’s trading session, supported in part by its negative correlation with the US Dollar (USD).
This upside was also supported by a short ceasefire agreed between Ukraine and Russia to mark Orthodox Easter, the first pause in fighting since the start of the war in 2022.
Turning to the start of this week, the Hungarian election result may provide a boost for the euro amid hopes that a victory for Peter Magyar could limit Hungary’s obstruction in Brussels.
US dollar (USD) stumbles as core inflation misses expectations
The US dollar ticked lower at the end of last week, with the latest US consumer price index reporting a sharp rise in headline inflation, but that core inflation undershot expectations.
If the Federal Reserve views the jump in headline inflation as a temporary, energy-driven shock, then the softer core reading may not justify a shift toward tighter monetary policy.
Looking ahead, movement in the US dollar is likely to be linked to Middle East developments at the start of this week. Any positive progress towards a peace agreement could limit demand for the safe-haven currency.
Canadian dollar (CAD) flat on uneven jobs report
The Canadian dollar (CAD) was rangebound on Friday, as Canada’s latest labour data reported a smaller-than-expected rise in employment, but that unemployment remained unchanged, defying forecasts that it would rise in March.
Looking ahead, the ‘loonie’ may give ground today if easing tensions in the Middle East trigger a softening of oil prices.
Data Releases
08:30 NZD Services PMI (Mar)