Australian Dollar (AUD) Rises Ahead of RBA Minutes
A return of global risk appetite prompted strong gains for the risk-sensitive Australian Dollar (AUD) yesterday. Rising commodity prices also lent support to the resource-linked ‘Aussie’.
Additionally, persistent bets on further interest rate hikes from the Reserve Bank of Australia (RBA) prompted gains in AUD.
Traders will be keenly awaiting the release of the latest RBA meeting minutes this morning. Any hawkish signals from the central bank could boost AUD.
New Zealand Dollar (NZD) Bolstered by Risk-On Mood
Monday saw the risk-sensitive New Zealand Dollar (NZD) benefit from an upbeat market mood. The ‘Kiwi’ climbed against its peers.
NZD’s positive correlation to the Australian Dollar provided further support to the currency.
Amid a lack of market-moving NZD data today, risk appetite could continue to drive the ‘Kiwi’.
Pound (GBP) Slips amid NI Protocol Deal Disappointment
The Pound (GBP) edged lower on Monday. GBP investors were disappointed to learn that a deal on the Northern Ireland Protocol was further away than many had hoped.
The Protocol is part of the post-Brexit trade deal between the EU and the UK, and has been the cause of a long-running dispute between the two sides. Hopes of its imminent resolution faded, thereby denting GBP.
Looking ahead, a forecast downbeat reading of the latest private sector PMIs could pull Sterling lower this evening.
Euro (EUR) Slips as Risk Appetite Returns
A risk-on mood in the markets pulled the Euro (EUR) lower on Monday. Evidence of a downturn in the Eurozone construction sector deepened EUR’s losses.
On the other hand, hawkish signals from European Central Bank (ECB) officials cushioned the common currency, limiting its losses.
Turning to today, February’s private sector PMIs for the Eurozone are expected to improve, which could see EUR rise. Additionally, a forecast improvement in Germany’s ZEW economic sentiment index may provide further support.
US Dollar (USD) Falls amid Thin Trading Conditions
A return of risk appetite prompted a downturn in the US Dollar (USD) on Monday. With US markets closed for President’s Day, the safe-haven ‘Greenback’ saw little other impetus.
Market bets on further policy tightening from the Federal Reserve limited losses for USD, however.
An expected poor reading for the US private sector could pull USD lower overnight if February’s PMIs print as forecast.
Canadian Dollar (CAD) Bolstered by Oil Price Rise
The commodity-linked Canadian Dollar (CAD) was pushed higher on Monday by a rebound in oil prices.
A forecast slip in January’s inflation rate could weigh on CAD tonight. The Canadian Dollar could however find support amid an expected rise in retail sales.
Data Calendar
Feb 21st 08:00 AUD Judo Bank Composite PMI Flash (Feb) 49.6
Feb 21st 10:30 AUD RBA Meeting Minutes
Feb 21st 19:00 EUR S&P Global Composite PMI (Feb) 50.6
Feb 21st 19:30 GBP S&P Global/CIPS Services PMI (Feb) 49.2
Feb 21st 20:00 EUR German ZEW Economic Sentiment Index (Feb) 22
Feb 21st 23:30 CAD Inflation Rate (Jan) 6.1%
Feb 21st 23:30 CAD Retail Sales MoM (Dec) 0.5%
Feb 22nd 00:45 USD S&P Global Composite PMI (Feb) 47.5