Australian Dollar (AUD) Slips after Latest RBA Meeting Minutes
Dovish minutes from the Reserve Bank of Australia (RBA) pulled the Australian Dollar (AUD) lower on Tuesday. The central bank signalled that a pause in policy tightening was being considered.
Hints that additional rate hikes had not completely been ruled out failed to lift the ‘Aussie’, though this may have limited losses.
Today, the RBA’s dovish outlook may continue to drive AUD lower amid a lack of economic data. The ‘Aussie’ may also be muted ahead of the looming Federal Reserve decision.
New Zealand Dollar (NZD) Stumbles as Markets Await Fed Meeting
The New Zealand Dollar (NZD) fell on Tuesday as jitters ahead of the Fed meeting tomorrow morning weighed on the ‘Kiwi’.
NZD’s correlation to the Australian Dollar added to the downside pressure.
With the Fed likely to raise interest rates once again, the prospect of higher global borrowing costs could worry investors today. As a result, the riskier ‘Kiwi’ could slip.
Pound’s (GBP) Movements Varied amid Bets on BoE Slowdown
A return of stability in the European banking sector prompted mixed movement in the Pound (GBP) yesterday. The renewed confidence strengthened Sterling against its weaker peers.
On the other hand, a possible pause in tightening from the Bank of England (BoE) saw GBP lose ground against its stronger rivals.
Inflation data could pull Sterling lower if it cools as forecast today. The data could add to bets on a halt in rate hikes from the BoE.
Euro (EUR) Bolstered by European Banking Sector Stability
The Euro (EUR) leaped on Tuesday as markets continued to take heart from growing financial stability in European markets.
The prospect of more interest rate hikes from the European Central Bank (ECB) also strengthened EUR.
A speech from ECB President Christine Lagarde could strengthen rate hike bets today, which may push the Euro higher.
US Dollar (USD) Climbs despite Expectations of Dovish Fed Decision
Renewed confidence in the US banking sector lifted the US Dollar (USD) on Tuesday. A recovery in US bond yields also lent support to USD.
However, bets on a less hawkish path from the Fed capped gains for the US Dollar.
USD may be subdued today ahead of the Fed decision. A 25bps rate hike could see the ‘Greenback’ consolidate its gains, although cautious forward guidance could weigh on the currency.
Canadian Dollar (CAD) Boosted by Oil Price Rally
The commodity-linked Canadian Dollar (CAD) was bolstered by a recovery in oil prices yesterday. A greater-than-expected fall in inflation later in the day capped gains for the ‘Loonie’.
If the latest BoC meeting minutes add to predictions of a softer rate hike pace, CAD could fall.
Mar 22nd 17:00 GBP Inflation Rate (Feb) 9.9%
Mar 22nd 18:45 EUR ECB President Lagarde Speech
Mar 23rd 03:30 CAD BoC Summary of Deliberations
Mar 23rd 04:00 USD Fed Interest Rate Decision 5.0%
Mar 23rd 04:30 USD Fed Press Conference