Australian Dollar (AUD) Gains on International Travel Resumption
The Australian Dollar (AUD) fluctuated throughout Monday’s European session, as international tensions weighed upon the risk-on currency, while easing travel restrictions lent upside.
Tensions escalated between Russia and the rest of the world, as Russian claims of a border incursion by Ukrainian ‘saboteurs’ were widely dismissed as false. Risk-on currencies generally fell: but the ‘Aussie’ was supported by high morale as Australia reopened its international border.
The Reserve Bank of Australia (RBA) will likely dictate AUD trading sentiment today, as speaker Christopher Kent addresses the Australian Financial Markets Association. If Kent strikes a dovish tone, the Australian Dollar may weaken.
Pound (GBP) Strengthens on Jump in Service-Sector Activity
The Pound (GBP) firmed at the beginning of the European session yesterday, as UK flash PMI data surprised to the upside.
Services activity shot up to 60.8 as spending rose on travel, leisure and entertainment, while manufacturing activity remained at 57.3 despite forecasts of a tumble to 57.2. While the manufacturing sector faced constraints over staff shortages, backlogs of work decreased at the fastest rate since June 2020.
Today, Bank of England (BoE) policymaker Dave Ramsden will give a speech before the publication of February’s industrial trends data: economic expectations are expected to improve, potentially lending GBP upside.
Euro (EUR) Stumbles on PMI Data, Risk-Off Sentiment
The Euro (EUR) dipped on Monday as both German and Euro-Area PMIs printed mixed, revealing slowing manufacturing activity alongside growth in services.
The single currency came under further pressure as tensions between Russia and Ukraine continued to escalate, stoke fears a war could break out in Europe.
The German Ifo business climate survey may affect EUR exchange rates today. Business morale is expected to have improved again in February, which may help the Euro stage a rebound.
US Dollar (USD) Struggles to Retain Support on Lack of Economic Data
The US Dollar (USD) slumped yesterday despite a growing risk-off mood, as the closure of US markets limited trading volatility in the US currency.
US officials are quick to announce that they believe a Russian invasion is on the cards, inspiring bearish sentiment within America and elsewhere. Furthermore, uncertainty regarding the Federal Reserve’s outlook ahead prevents investors from placing bullish bets.
US PMIs may decide USD movement today, unless news from Ukraine overshadows economic stimuli. Both services and manufacturing activity are expected to have increased, potentially lending the currency support.
Canadian Dollar (CAD) Wavers on Risk Aversion, Oil Dynamics
The Canadian Dollar (CAD) traded in a mixed range on Monday as oil prices rose, but low risk appetite capped significant ‘Loonie’ gains.
New Zealand Dollar (NZD) Firms despite Geopolitical Tensions
The New Zealand Dollar (NZD) rose through yesterday’s session in spite of geopolitical headwinds and a lack of data.
AUD upside supported the ‘Kiwi’, minimising the impact of comments from NZ Prime Minister Jacinda Arden, who said it would be hard to set an exact date for easing Covid mandates as infections are likely to peak again in coming weeks.
Data Releases
Feb 22nd 11:00 AUD RBA Kent Speech N/A
Feb 22nd 19:00 EUR German Ifo Business Climate (Feb) 96.5
Feb 22nd 20:45 GBP BoE Ramsden Speech N/A
Feb 22nd 21:00 GBP CBI Industrial Trends Orders (Feb) 25
Feb 23rd 00:45 USD Markit Manufacturing PMI Flash (Feb) 56
Feb 23rd 00:45 USD Markit Services PMI Flash (Feb) 53