Pound (GBP) Ticks Higher as Risk Appetite Improves
The Pound (GBP) rose from multi-month lows yesterday as Sterling attracted some dip-buying among investors seeking a bargain.
In addition, a modest recovery in European risk appetite, as evident in the equity markets, also lent support to the risk-sensitive Pound.
The finalised UK services PMI could impact the Pound this morning, while the crisis in Ukraine will also likely drive some movement.
Euro (EUR) Extends Downside as Ukraine Crisis Continues
The Euro (EUR) extended its slide yesterday, hitting fresh multi-year lows against many of its rivals, as the Russia-Ukraine war continued to put EUR under significant pressure.
The economic fallout and burgeoning refugee crisis caused by the war have dampened hopes that the European Central Bank (ECB) will tighten monetary policy quicker than anticipated. Even a hotter-than-expected CPI of 5.8% failed to cheer investors.
The ECB’s monetary policy meeting accounts for their February rate decision could cause some movement today. However, the meeting minutes are from before the Ukraine crisis, so any hawkish comments may have a limited impact on EUR.
US Dollar (USD) Softens amid Cautiously Upbeat Sentiment
The US Dollar (USD) ticked lower yesterday as a slightly more risk-positive mood dented demand for the safe-haven ‘Greenback’.
A stronger-than-forecast ADP employment change failed to meaningfully boost the Dollar in the afternoon. Meanwhile, hawkish comments from Federal Reserve Chair Jerome Powell, who said that a rate hike this month was still ‘appropriate’, also had little effect on the ‘Greenback’.
This afternoon, the US ISM services PMI and the second part of Powell’s Congressional testimony could potentially support USD.
Canadian Dollar (CAD) Rises on BoC Rate Hike
The Canadian Dollar (CAD) gained against most of its rivals yesterday as the Bank of Canada (BoC) raised interest rates from 0.25% to 0.5%, as expected.
The BoC also signalled more rate hikes to come amid stronger GDP growth and fears of more pervasive inflation.
A speech this afternoon from BoC Governor Tiff Macklem could cause some movement, while oil prices will also likely influence the commodity-linked ‘Loonie’.
Australian Dollar (AUD) Climbs on Positive Data
The Australian Dollar (AUD) strengthened against many of its peers overnight as Australia’s final services PMI and balance of trade figures both beat market forecasts.
New Zealand Dollar (NZD) Flat amid Mixed Market Mood
The risk-sensitive New Zealand Dollar (NZD) wavered in overnight trade, struggling for direction amid a tepid market mood.