Australian Dollar (AUD) Climbs on Rising Risk Appetite
The Australian Dollar (AUD) rose against its peers in midweek trade, as risk sentiment recovered on easing geopolitical tensions.
This comes after Moscow reported pulled back some of its troops from the Ukrainian border as Russian President Vladimir Putin remarked that Russia does not want to go to war with Europe. Despite misgivings from NATO, who claimed not to have seen any evidence of de-escalation, investors remained optimistic.
Into today, Australia’s employment data is likely to influence trading – unemployment is expected to remain unchanged following three months of decline, potentially inspiring headwinds.
Pound (GBP) Fluctuates on Cost-of-Living Anxiety
The Pound (GBP) fell against several rivals yesterday in spite of higher-than-expected UK inflation data. Consumer prices rose by 5.5% in the year to January, hitting a 30-year high.
Although the likelihood of an interest rate hike from the Bank of England (BoE) was increased by the news, investors remained bearish on cost-of-living concerns. Business groups warn rising prices will push more firms towards insolvency, as UK households brace for an ill-timed tax rise.
A lack of UK data leaves Sterling to trade on external factors today. If tensions escalate once more between Russia and Ukraine, GBP could extend losses against safe-haven currencies
Euro (EUR) Sinks despite Upbeat Industrial Production
The Euro (EUR) slumped Wednesday as intermittent upside in the US Dollar weighed upon the single currency.
EUR downside occurred in spite of upbeat industrial production data – production increased above expectations, by 1.2% rather than 0.3%. Elsewhere, European Central bank (ECB) policymaker Martins Kazaks remarked that a rate hike in 2022 is ‘quite likely’, extending some support.
An economic bulletin and further speeches from the ECB could affect the Euro today – if a hawkish tone is struck by central bank officials, EUR could firm against its peers.
US Dollar (USD) Subdued by Improving Market Mood
The US Dollar (USD) trended broadly lower in midweek trade, although positive US data lent occasional support to the currency.
The ‘Greenback’ ticked up briefly later in the European session, as upbeat retail data lifted USD sentiment: sales increased by 3.8% in January as opposed to the 2% expected. Moreover, industrial production rose by 1.4% on a monthly basis.
Employment data and speeches from Federal Reserve policymakers may influence the US Dollar today, alongside geopolitical developments – if Russia pursues a diplomatic approach, USD could fall amidst risk-on trading.
Canadian Dollar (CAD) Firms on Inflation Data
The Canadian Dollar (CAD) rose yesterday as the country’s Consumer Price Index reached 5.1% – the highest rate of inflation since 1991.
Oil prices also rose on fear of supply shortages – if WTI crude continues to appreciate, CAD could climb further today.
New Zealand Dollar (NZD) Buoyed by AUD Strength
The New Zealand Dollar (NZD) strengthened on Wednesday as improving risk sentiment bolstered the risk-sensitive currency. Strength in the ‘Aussie’ also lent support.
Data Releases
Feb 17th 10:30 AUD Unemployment Rate (Jan) 4.2%
Feb 17th 10:30 AUD Employment Change (Jan) 0
Feb 17th 19:00 EUR ECB Economic Bulletin N/A
Feb 17th 23:30 USD Initial Jobless Claims (12/Feb) 219K
Feb 18th 00:00 EUR ECB Lane Speech N/A
Feb 18th 02:00 USD Fed Bullard Speech N/A