Pound (GBP) Stumbles as Russia Accused of War Crimes
The Pound (GBP) slipped against many of its peers yesterday amid rising tensions between Russia and the West. Western leaders expressed horror and outrage as evidence emerged of a civilian massacre in Bucha, Ukraine, carried out by occupying Russian forces.
Despite this, European stock markets managed to edge higher, with a modestly upbeat market mood supporting the risk-sensitive Pound and limiting its losses.
This morning, any surprises from the UK’s final services PMI could impact the Pound. Otherwise, risk appetite may be the defining factor in GBP exchange rates.
Euro (EUR) Falls as Ukraine Accuses Russia of Genocide
The Euro (EUR) fell yesterday as reports of the torture and murder of hundreds of Ukrainian civilians by Russian soldiers soured Russia-Ukraine relations. Ukrainian President Volodymyr Zelenskiy described the killings as ‘genocide’ and said this makes it harder for the two sides to negotiate.
The Eurozone economy is particularly vulnerable to the ongoing crisis in Ukraine. As the news could derail attempts to make peace, thereby prolonging the conflict, EUR slid.
Despite a slight upward revision to the Eurozone services PMI today, EUR may face headwinds. Reports suggest that the EU will adopt a new round of sanctions against Russia tomorrow. This could increase the burden on the Eurozone economy.
US Dollar (USD) Falters as Factory Orders Decline
The US Dollar (USD) struggled yesterday as a risk-on mood and a contraction in US factory orders both weighed on the safe-haven currency.
However, hawkish expectations from the Federal Reserve underpinned the ‘Greenback’ and prevented serious losses ahead of the Federal Open Market Committee (FOMC) meeting minutes tomorrow.
Turning to today, an expected rise in the US ISM services PMI could boost USD. A handful of Fed speeches could also provide the US Dollar with some support.
Canadian Dollar (CAD) Ticks Higher as Oil Prices Recover
The Canadian Dollar (CAD) found some success yesterday amid a recovery in oil. Saudi Arabia hiked prices for its Arab Light crude, pushing prices higher elsewhere.
Looking ahead, Canada’s latest trade data could support CAD if it shows a widening surplus, as markets expect.
Australian Dollar (AUD) Surges on Hawkish RBA Signal
The Australian Dollar (AUD) surged higher overnight after the Reserve Bank of Australia (RBA) struck a more hawkish tone following its interest rate decision.
While the central bank kept its cash rate unchanged, it no longer says it needs to be ‘patient’ in its approach to tightening policy. This change in language signals that a rate rise could be close.
New Zealand Dollar (NZD) Enjoys AUD Correlation
The New Zealand Dollar (NZD) also shot higher in overnight trade as the ‘Kiwi’ enjoyed its strong positive correlation to the ‘Aussie’ Dollar.