Pound (GBP) Muted amid Lack of Data
The Pound (GBP) was subdued yesterday as a lack of UK economic data left Sterling vulnerable to losses.
Meanwhile, markets took a breather as Ukrainian and Russian diplomats met on the Ukrainian-Belarusian border to negotiate. This may have helped to limit the Pound’s downside.
The Russia-Ukraine war is likely to remain foremost in investors’ minds today. If both sides agree on a ceasefire, then Sterling may find some support. However, analysts believe this is unlikely.
Euro (EUR) Struggles to Regain Losses
The Euro (EUR) was mixed during yesterday’s session, edging higher against the Pound and the US Dollar (USD) as Russia-Ukraine negotiations began.
However, the single currency was unable to fully regain the heavy losses it suffered when markets reopened on Sunday evening GMT. The crippling economic sanctions on Russia announced over the weekend will likely have a particularly damaging effect on the Eurozone economy.
Turning to today, Germany’s latest retail sales and inflation reports could impact EUR, although investors will likely be more focused on the situation in Ukraine.
US Dollar (USD) Falls as Peace Talks Begin
The safe-haven US Dollar softened yesterday amid a cautious recovery in risk appetite.
Markets welcomed the peace talks between Ukrainian and Russian delegates. Although many think a ceasefire is unlikely, the opening of diplomatic channels is definitely a positive development in the ongoing war.
Risk appetite may continue to drive USD movement today. Later in the afternoon, the US ISM manufacturing PMI could also impact the ‘Greenback’.
Canadian Dollar (CAD) Strengthens ahead of BoC Decision
The Canadian Dollar (CAD) firmed against many of its peers yesterday as markets expect the Bank of Canada (BoC) to raise interest rates at its meeting on Wednesday.
Canada’s GDP data this afternoon could impact the ‘Loonie’. Analysts expect growth to have picked up modestly in the fourth quarter of 2021, despite a slowdown in December.
Australian Dollar (AUD) Gains on Australian and Chinese Data
The Australian Dollar (AUD) ticked higher overnight, despite the Reserve Bank of Australia (RBA) striking a fairly dovish tone following its latest interest rate decision.
The upside came on the back of strong Australian manufacturing data and better-than-expected Chinese PMIs.
New Zealand Dollar (NZD) Edges Higher as Risk Appetite Improves
The New Zealand Dollar (NZD) also rose in overnight trade as the risk-sensitive ‘Kiwi’ enjoyed a modest uptick in risk appetite as well as the positive PMI reports from China.