Pound (GBP) Stumbles as Economic Sanctions Intensify
The Pound (GBP) slipped lower yesterday, touching fresh multi-month lows against some of its peers, as the Russia-Ukraine war and intensifying economic sanctions continued to weigh heavily on GBP.
The UK’s final services PMI failed to provide much support, with the score printing below preliminary estimates.
With no notable UK data out today, we can expect the ongoing Ukraine crisis to drive most movement in Sterling.
Euro (EUR) Hits Fresh Multi-Year Lows as Ukraine Crisis Continues
The Euro (EUR) extended its war-driven losses yesterday, hitting new multi-year lows, as the Ukraine crisis continues to worsen and renewed negotiations offered little hope.
The single currency’s strong negative correlation to the US Dollar (USD) also weighed on EUR, as did worries that the European Central Bank (ECB) will delay raising interest rates due to the economic fallout of the crisis.
Looking ahead, economists expect Eurozone retail sales to have recovered in January. However, this may not be enough to support the Euro if the headlines from Ukraine remain troubling.
US Dollar (USD) Rallies on Downbeat Mood and Hawkish Fed
The US Dollar was initially subdued yesterday as a mixed market mood left the safe-haven currency without a clear direction.
However, sentiment soured in the afternoon, supporting USD. In addition, Federal Reserve Chair Jerome Powell struck a more hawkish tone on the second day of his Congressional testimony. Powell signalled that the Fed was willing to hike rates more aggressively if it was needed to bring down inflation, which boosted USD.
Today, USD investors will be looking ahead to the non-farm payrolls figures. After the strong ADP employment report on Wednesday, economists foresee another positive snapshot of the US labour market.
Canadian Dollar (CAD) Ticks Lower as Oil Prices Retreat
The oil-sensitive Canadian Dollar (CAD) softened yesterday as crude prices retreated from an 11-year high amid reports that the 2015 Iran nuclear deal may soon be revived. This could allow Iran to begin exporting oil again, adding more supply to the market.
Oil prices could continue to influence CAD today, while Canada’s Ivey PMI this afternoon will likely also have an impact.
Australian Dollar (AUD) Gains following Retail Sales
The Australian Dollar (AUD) strengthened overnight, despite a brief drop, with a confirmed recovery in Australian retail sales seemingly boosting the ‘Aussie’.
New Zealand Dollar (NZD) Climbs despite Risk-Off Mood
The New Zealand Dollar (NZD) also firmed overall in overnight trade as the risk-sensitive ‘Kiwi’ continues to show resilience despite the Russia-Ukraine crisis, boosted by soaring commodities prices.