Pound (GBP) Falls as Markets Calm
The Pound (GBP) struggled at the end of last week but recovered some of its recent losses against the US Dollar, as markets briefly calmed after Thursday’s sharp selloff.
Investors buying the dip helped the Pound regain some ground against USD, although expectations for more modest monetary policy tightening from the Bank of England (BoE) again weakened GBP exchange rates.
The escalation of force by Russia in its war against Ukraine will continue driving GBP today, with further sanctions against Russia also stoking volatility on concerns of disruption to economic activity in the UK.
Euro (EUR) to Slide Further as Ukraine War Rages?
The Euro (EUR) clawed back some of its Ukraine crisis-driven losses at the end of last week, as the West’s decision not to impose sanctions on oil and gas, or restricting Russia from the Swift financial payment helped support EUR.
At the same time, the Eurozone economic sentiment index for February rising more-than-expected to a three-month high supported the single currency.
However, comments from European Central Bank (ECB) President Christine Lagarde weighed slightly on EUR sentiment by highlighting uncertainty is likely to weaken economic growth.
Looking ahead, the escalating crisis in Ukraine and further sanctions on Russia, including against Russian banks using the Swift global payments system, look to already be pressuring EUR exchange rates today.
US Dollar (USD) Retreats as Market Mood Improves
The US Dollar relinquished some of the week’s gains on Friday as an improved market mood weakened safe-haven demand for the currency.
Expectations for less aggressive interest rate hikes from the Fed also continued weighing on USD exchange rates, despite the PCE price index rising more than expected to show inflationary pressure continued building in January.
Ahead of the non-manufacturing ISM PMI tomorrow, the US Dollar will remain sensitive to market mood driven by Russia’s aggression in Ukraine, especially after Russian President Vladimir Putin put the country’s nuclear forces on high alert.
Canadian Dollar (CAD) Mixed as Oil Prices Fluctuate
Trade in the Canadian Dollar (CAD) was mixed at the end of last week, gaining against the safe-haven US Dollar but falling against risk-sensitive peers.
WTI crude prices fell back to $91 a barrel after Thursday’s highs, which undermined support for the oil-sensitive ‘Loonie’.
However, after WTI crude prices surged higher again at the start of this week’s session, CAD exchange rates may push higher again.
Australian Dollar (AUD) Losses Capped by Stronger-than-Expected Retail Sales
The Australian Dollar (AUD) ticked lower during today’s Asian trading session, pressured by risk-off trade. However these losses were tempered by the release of Australia’s latest retail sales figures after they reported a much larger-than-expected rebound in sales growth last month.
Looking ahead, the Reserve Bank of Australia (RBA) will conclude its latest policy meeting later tonight. Will a reiteration of the bank’s dovish guidance apply fresh pressure to the ‘Aussie’?
New Zealand Dollar (NZD) Undermined by Risk-Off Trade
The New Zealand Dollar (NZD) also fell back in overnight trade, with skittish investors shunning the risk-sensitive ‘Kiwi’ amid heightened geopolitical tensions.