Australian Dollar (AUD) Resists Downside on Commodity Prices
The Australian Dollar (AUD) rose against several peers at the beginning of the week despite a risk-off mood, as rising commodity prices capped losses.
Iron ore continued to increase in value, leading several analysts to speculate that strong AUD trading could continue; nevertheless, it was noted that a further deterioration in China’s Covid situation could weigh upon the ‘Aussie’.
Looking ahead, a speech from the Reserve Bank of Australia (RBA) Governor Philip Lowe may influence exchange rates today; if Lowe strikes a hawkish tone, AUD is likely to enjoy tailwinds.
New Zealand Dollar (NZD) Wavers on Risk-Off Mood
The New Zealand Dollar (NZD) traded in a mixed range yesterday as a risk-off market mood weighed upon the currency while relative AUD strength capped losses.
The situation in Ukraine weighed upon risk sentiment, as Ukraine refused to surrender the city of Mariupol to Russian forces; despite ongoing peace talks, a UN spokesperson declared that ‘the Russians have not leaned in to any possibility for a diplomatic solution.’
A lack of significant data leaves the ‘Kiwi’ to trade on external factors today – if the Australian Dollar strengthens, NZD also firm.
Pound (GBP) Gains Limited by BoE Headwinds
The Pound (GBP) was unable to make any significant gains on Monday, as investors’ spirits remained subdued over last week’s Bank of England (BoE) decision.
While spiking briefly against a couple of its peers, Sterling remained below last week’s levels for the most part, dented by risk-off trade. Analysts at Scotiabank believe the BoE will disappoint markets further in the coming months.
Industrial trends orders could affect trading today – if March’s data falls as expected, the Pound may face headwinds.
Euro (EUR) Sinks on USD Strength, Dovish Lagarde Speech
The Euro (EUR) tumbled at the beginning of the week, as risk-off trading inspired US Dollar (USD) upside, which in turn exerted pressure on the single currency.
Also weighing upon the Euro was a dovish speech from European Central Bank (ECB) President Christine Lagarde. Lagarde laid the foundations for a gradual tightening of monetary policy, remarking that the bloc was no longer seeing signs of stagflation.
Further speeches may affect EUR trading today – if Lagarde repeats yesterday’s cautionary rhetoric, EUR might come under additional pressure.
US Dollar (USD) Finds Support on Safe Haven Appeal
The US Dollar enjoyed some upside yesterday as the conflict in Ukraine triggered a risk-off mood.
Also supporting the ‘Greenback’ were positive comments from the Federal Reserve: FOMC member Raphael Bostic announced that the war in Ukraine had not changed his thinking on balance sheet reduction, which could happen quickly and faster than last time.
Three more Fed speeches are likely to influence USD trading today – if a similar hawkish tone is struck, the US Dollar may climb.
Canadian Dollar (CAD) Jumps on Rising Crude Prices
The Canadian Dollar (CAD) firmed on Monday as rising oil prices buoyed the currency: the cost of crude oil rallied over 4% on the first day of the new week.
Data Releases
Mar 22nd 11:00 AUD RBA Gov Lowe Speech N/A
Mar 22nd 21:00 GBP CBI Industrial Trends Orders (Mar) 16
Mar 22nd 23:15 EUR ECB Lagarde Speech N/A
Mar 23rd 00:30 USD Fed Williams Speech N/A
Mar 23rd 04:00 USD Fed Daly Speech N/A
Mar 23rd 07:00 USD Fed Mester Speech N/A