Australian dollar (AUD) undermined by drop in morale
The Australian dollar (AUD) initially struggled yesterday, softening in response to a sharper-than-expected drop in domestic consumer and business sentiment since the start of the war in the Middle East.
The ‘Aussie’ then bounced back through the European session amid fresh hopes that a diplomatic solution could be found for the end of the conflict.
In the absence of any domestic data, expect movement in AUD exchange rates to be dictated by wider market trends today.
New Zealand dollar (NZD) firms in risk-on trade
The New Zealand dollar (NZD) rallied through Tuesday’s session, bolstered by fresh de-escalation optimism.
Much like its antipodean cousin, the ‘kiwi’ is likely to remain at the mercy of wider market trends today.
Pound (GBP) firms despite UK growth downgrade
The pound (GBP) trended broadly higher through yesterday’s session, despite a sharp downgrade to UK economic growth expectations for 2026
The International Monetary Fund’s (IMF) latest forecasts suggest the UK will be the G7 economy worst hit by the war in Iran, with UK GDP now expected to expand by 0.8%, against previous forecasts for a 1.3% expansion.
Bailey is scheduled to speak again today, but may not offer any fresh direction for the pound, leaving GBP exchange rates to trade without direction.
Euro (EUR) subdued on ECB Lagarde remarks
The euro (EUR) softened on Tuesday, undermined by a prevailing risk-on bias and remarks from European Central Bank President Christine Lagarde.
Speaking to Bloomberg, Lagarde stressed the need for a data-dependent approach to policy, dampening bets for an interest rate hike in the near-term.
The release of the Eurozone’s latest industrial production figures could provide some modest support to the euro today, if they confirm production returned to growth in February.
US dollar (USD) retreats on fresh peace talk hopes
The US dollar faced notable selling pressure yesterday, retreating to its worst levels since the start of the US-Iran war.
Investors continued to reduce their positions in the safe-haven currency, as US President Donald Trump claimed that peace talks with Iran could restart ‘over the next two days’.
No doubt the US dollar will continue to be influenced by Middle East sentiment today, with fresh peace hopes likely to extend the USD selling bias.
Canadian dollar (CAD) dented by falling oil prices
The Canadian dollar (CAD) ticked lower against most of its peers on Tuesday, undermined by a sizable drop in oil prices.
Looking ahead, movement in the ‘loonie’ is likely to continue to be influenced by oil price dynamics through today’s session.
Data Releases
19:00 EUR Industrial Production (Feb)
04:00 GBP BoE Bailey Speech