Pound (GBP) Rises amid Cautious Market Optimism
The risk-sensitive Pound (GBP) wavered higher yesterday amid a cautiously optimistic market mood as Russia and Ukraine engaged in further peace talks.
In addition, expectations of another 25-basis-point rate hike at the Bank of England’s (BoE) meeting on Thursday also provided a tailwind for the Pound.
Sterling faces headwinds this morning after some worrying jobs data. Although unemployment fell by more than expected, this was in part due to a rise in economic inactivity.
Euro (EUR) Climbs as Russia-Ukraine Peace Talks Continue
The Euro (EUR) also strengthened through yesterday’s trade as renewed Russia-Ukraine negotiations cheered EUR investors.
In other positive developments, Russia agreed to a ceasefire to allow civilians to evacuate the city of Mariupol. Ukrainians have been struggling to leave the besieged city for weeks, where there is no water or electricity.
Today, the latest ZEW economic sentiment index for Germany is due to be published. Analysts expect a sharp drop in investor morale due to the economic fallout from the Russia-Ukraine war.
US Dollar (USD) Slips amid Risk-Positive Trade
The US Dollar (USD) fell against most of its peers yesterday as the upbeat market mood dampened the appeal of the safe-haven ‘Greenback’.
However, rising Covid cases in China capped risk sentiment while stronger US Treasury yields supported the ‘Greenback’, limiting USD’s losses.
Looking ahead, today’s PPI result could impact the US Dollar, particularly if it beats expectations. Otherwise, risk appetite is likely to drive most USD movement.
Canadian Dollar (CAD) Wavers amid Lack of Data
The Canadian Dollar (CAD) was mixed yesterday, heading mostly sideways overall, as a muted oil market and a lack of Canadian data kept the commodity-linked ‘Loonie’ in a narrow range.
With market-moving Canadian data still thin on the ground today, CAD could struggle for a clear direction again.
Australian Dollar (AUD) Stumbles following Dovish RBA Minutes
The risk-sensitive Australian Dollar (AUD) slipped overnight as rising Covid cases in China weighed on risk appetite and the Reserve Bank of Australia’s (RBA) latest meeting minutes pushed back on rate hike bets.
New Zealand Dollar (NZD) Falls as China Expands Lockdown
The New Zealand Dollar (NZD) also ticked lower in overnight trade as China widened lockdown restrictions in an attempt to contain the country’s latest Covid outbreak. However, NZD bounced higher as the European session opened.