Australian Dollar (AUD) Bolstered by Continuing Commodity Rally
The Australian Dollar (AUD) climbed against its peers at the beginning of the week as commodity prices continued to rise.
While a risk-off market mood capped significant gains for the ‘Aussie’, the rising cost of iron ore – one of Australia’s main exports – lent support to the currency. Furthermore, the Australian government is expected to release a generous budget statement tomorrow ahead of May’s election.
Australian retail data could influence trading today – if sales grew as expected in February, AUD may enjoy upside.
New Zealand Dollar (NZD) Weakens amidst Lack of Data
The New Zealand Dollar (NZD) corrected down on Monday following a recent climb, as a lack of data exposed the currency to downside risks.
According to analysts at ANZ Bank, markets have priced in upcoming hikes and rates are not likely to change much until the Reserve Bank of New Zealand’s (RBNZ) decision on 13 April.
A further lack of significant data in today’s session leaves the ‘Kiwi’ to trade on external factors including risk sentiment, which may leave it trapped in a bearish trading pattern.
Pound (GBP) Sentiment Dented by Dovish BoE
The Pound (GBP) sank against its peers yesterday, as Bank of England (BoE) Governor Andrew Bailey gave a dovish speech titled ‘Macroeconomic and Financial Stability in Changing Times’.
Bailey reiterated that ‘the situation is very volatile’, adding that it ‘will take time before we really come to a proper assessment of how the joint experience of COVID and the Ukraine invasion [may] cause the world economy to emerge into new steady state.’
Consumer credit data may affect Sterling exchange rates today – if consumers borrowed more in February than January, as expected, GBP could trend higher.
Euro (EUR) Supported by German Bond Yields
The Euro (EUR) was able to resist significant downside at the beginning of the week as German 10y bund yields rose to 0.63%.
Also lending support to the single currency was speculation regarding the beginning of the European Central Bank (ECB)’s hiking cycle. The central bank is expected to hike interest rates for the first time in over a decade at some point this year.
Into today, German consumer confidence data could have some effect on Euro trading, alongside US Dollar dynamics and risk sentiment. If risk-on trading resumes, EUR might enjoy further upside.
US Dollar (USD) Boosted by Risk-Off Sentiment
The US Dollar (USD) climbed against its peers on Monday as an overall risk-off market mood drew support towards safe-haven currencies.
Despite a resumption in negotiations between Ukraine and Russia, with Ukrainian President Volodymyr Zelenskyy stating his intention to secure ‘peace without delay’, officials have stated they don’t think there will be any breakthrough in the next round of talks.
Further buoying the ‘Greenback’ is a fall in the USA’s goods trade deficit from an all-time high of $107.63 billion in January.
A speech from the Federal Reserve’s John Williams may direct USD exchange rates today; if Williams strikes a hawkish note, the US Dollar may firm again.
Canadian Dollar (CAD) Slides on Lower Oil Prices
The Canadian Dollar (CAD) weakened yesterday as the price of crude oil fell. Demand for the commodity is expected to decrease as Shanghai goes into lockdown over record numbers of coronavirus cases.
Data Releases
Mar 29th 10:30 AUD Retail Sales (Feb) 1%
Mar 29th 16:00 EUR German Gfk Consumer Confidence (Apr) -14
Mar 29th 18:30 GBP BoE Consumer Credit (Feb) £0.843bn
Mar 29th 23:00 USD Fed Williams Speech N/A
Mar 30th 00:00 USD JOLTs Job Openings (Feb) 11m
Mar 30th 00:00 USD CB Consumer Confidence (Mar) 107