Pound (GBP) Mixed amid Risk-Off Mood and Strong PMI
The Pound (GBP) was mixed yesterday, moving in different directions against its main rivals.
On one hand, the souring mood around the Russia-Ukraine crisis weighed on the risk-sensitive Pound. However, ‘exceptionally strong’ growth in the UK services PMI buoyed GBP.
With no notable UK data due out today, the Ukraine war and cost-of-living crisis could both weigh on GBP. The planned National Insurance hike will hit workers and businesses from today. Meanwhile, will the UK announce new sanctions on Russia?
Euro (EUR) Weakens as EU Proposes New Sanctions
The Euro (EUR) continued sliding yesterday as the EU proposed a fifth round of sanctions against Russia.
While the new restrictive measures will increase the economic pressure on Moscow, they’ll also hurt the Eurozone economy.
During today’s trade, any updates on the proposed EU sanctions and the war in Ukraine could continue to drive EUR.
US Dollar (USD) Volatile amid Unusual Economic Activity
The US Dollar (USD) fluctuated yesterday, without a clear catalyst for the volatility, though there are two factors that may have contributed to the unusual movement in USD.
Recently, the US Treasury yield curve has inverted over several trading sessions – potentially an early indicator of a looming recession. In addition, the US prevented Russia from servicing Dollar bond payments from US banks, which could have caused some turbulence in USD exchange rates.
Turning to today’s session, USD could trade mostly on risk sentiment as investors await the Federal Open Market Committee (FOMC) meeting minutes this evening.
Canadian Dollar (CAD) Firms on Oil Supply Fears
The Canadian Dollar (CAD) strengthened yesterday as reports of new EU sanctions and stalled talks around the Iran nuclear deal fuelled fears of a tighter oil supply, thereby boosting the commodity-linked currency’s appeal.
Turning to today, the Canadian Ivey PMI could affect CAD. Movements in the oil market may also impact the ‘Loonie’.
Australian Dollar (AUD) Wobbles as China Covid Woes Offset RBA Rally
The risk-sensitive Australian Dollar (AUD) wavered overnight amid mixed AUD sentiment. As the ‘Aussie’ is a proxy for the Chinese economy, news of the worsening Covid outbreaks in China weighed on the currency, offsetting tailwinds from the Reserve Bank of Australia’s (RBA) hawkish hold.
New Zealand Dollar (NZD) Wavers Higher as Commodities Prices Rise
The New Zealand Dollar (NZD) also wavered in overnight trade as the bearish market mood pressured the risk-sensitive currency. However, NZD managed to tick higher against many of its peers overall. Rising materials prices may have helped the commodity-linked ‘Kiwi’ strengthen.