Australian dollar (AUD) strengthened by risk-on flows
The Australian dollar (AUD) appreciated through Monday’s session as easing tensions in the Gulf underpinned a positive shift in market risk sentiment.
Following a pause in hostilities between the US and Iran over the weekend, hopes for a fresh ceasefire agreement cheered investors at the start of the week.
AUD investors will look to a speech by Reserve Bank of Australia (RBA) Governor Michele Bullock for fresh impetus today. If Bullock’s remarks strike a hawkish tone, it could extend AUD’s upside potential.
New Zealand dollar (NZD) gains tempered by profit-taking
The New Zealand dollar (NZD) also traded positively yesterday, although its gains were capped amid some profit-taking in the currency.
In the absence of any notable NZD data, market risk dynamics are likely to remain the primary catalyst for the ‘kiwi’ today.
Pound (GBP) stable as UK borrowing costs retreat
The pound (GBP) traded sideways at the start of the week as falling energy prices helped to temper UK inflation concerns and pull 10-year UK gilt yields back below 5%.
The drop in borrowing costs was welcomed by the new Burnham government as it may make it easier to fund some of his more ambitious fiscal reforms.
Looking ahead, Sterling may continue to trade in a narrow range today, as GBP investors avoid taking any strong positions ahead of the Bank of England’s (BoE) interest rate decision later in the week.
Euro (EUR) firms as gas concerns recede
The euro (EUR) traded with modest support yesterday, amid an easing of recent European gas concerns.
EUR sentiment suffered at the end of last week amid fears of a potential gas shortage this winter, but hopes for a fresh US-Iran ceasefire and resumption of energy shipments through the Gulf helped to curb these concerns.
EUR data is in short supply today, which could leave the euro to trade without strong directional bias.
US dollar (USD) slips amid pause in US-Iranian hostilities
The US dollar (USD) ticked broadly lower on Monday, amid an apparent de-escalation in the Middle East over the weekend.
This in turn bolstered market risk appetite and suppressed global energy prices at the expense of the safe-haven ‘greenback’.
The US dollar looks poised to extend its decline through today’s session if this pause in hostilities enters its fourth day.
Canadian dollar (CAD) retreats as oil prices plunge
The Canadian dollar (CAD) stumbled out of the gates this week, as oil prices tumbled to around $90 per barrel on US-Iran peace hopes.
Expect the CAD selling bias to remain firmly in place if this correction in oil prices persists through today’s session.
Data releases
13:05 AUD RBA Governor Bullock Speech