Australian Dollar (AUD) Rises as Risk Appetite Improves
The Australian Dollar (AUD) gained against several peers on Thursday as cautious optimism prevailed following conflicting geopolitical updates.
While the Ukrainian military accused Russian-occupying forces of firing overnight at a village in the Luhansk region, US satellite images confirmed that Russia had pulled back some equipment from the Ukrainian border.
Elsewhere, employment in Australia rose unexpectedly by 12,900 in January, boosting AUD.
A lack of data today means the ‘Aussie’ will likely trade on risk appetite, potentially climbing higher if market sentiment remains upbeat.
Pound (GBP) Finds Support on BoE Optimism
The Pound (GBP) rose through yesterday’s session, as investors anticipate hawkish policy action from the Bank of England (BoE).
Following yesterday’s hotter-than-expected CPI data, markets expect a 50 bps rate hike at March’s meeting of the Monetary Policy Committee (MPC).
Retail data could buoy GBP today, as sales are expected to have increased by 1% in January.
Euro (EUR) Dips on Risk Sentiment
The Euro (EUR) sank on Thursday despite a reasonably optimistic economic bulletin from the European Central Bank (ECB). The bulletin confirmed that the Governing Council stands ready to adjust its instruments so that inflation stabilises at 2% over the medium term.
Weighing on the single currency, recovering risk sentiment bolstered riskier assets against those considered safe-haven bets.
Various speeches may direct EUR movement today, alongside flash consumer confidence data. Confidence is expected to have increased marginally, though remaining in the minus figures.
US Dollar (USD) Subdued by Dovish Fed Attitude
The US Dollar (USD) fell yesterday as investors were surprised by an uncharacteristically dovish outlook from the Federal Reserve Bank.
Yesterday’s FOMC minutes conceded it would be appropriate to remove policy accommodation faster than anticipated if inflation does not move down, but failed to reinforce expectations for a 50 bps rate hike in March.
Several Fed officials are due to speak today, potentially influencing USD exchange rates: if the speakers strike a more hawkish tone, the ‘Greenback’ may recoup some losses.
Canadian Dollar (CAD) Wavers as Oil Prices Slide
The Canadian Dollar (CAD) tumbled on Thursday as oil prices dropped, having climbed initially on a resumption of international tensions.
Today’s retail data could affect onward CAD trading – if sales drop as anticipated, the ‘Loonie’ could come under pressure.
New Zealand Dollar (NZD) Enjoys Risk-On Tailwinds
The New Zealand Dollar (NZD) strengthened yesterday as risk appetite improved; AUD upside also supported the ‘Kiwi’.
Data Releases
Feb 18th 08:00 USD Fed Mester Speech N/A
Feb 18th 17:00 GBP Retail Sales (Jan) 1%
Feb 18th 23:30 CAD Retail Sales (Dec) -2.1%
Feb 19th 01:00 EUR Consumer Confidence Flash (Feb) -8
Feb 18th 01:15 USD Fed Evans Speech N/A
Feb 18th 01:45 USD Fed Waller Speech N/A
Feb 18th 02:00 USD Fed Williams Speech N/A
Feb 18th 04:30 USD Fed Brainard Speech N/A