US Dollar Buoyed by Risk-Off Mood

US Dollar (USD) Undermined by Dovish Fed Comments

The US Dollar (USD) firmed at the start of yesterday’s session as widespread risk aversion amid the Hamas-Israel conflict boosted demand for the safe-haven currency.

USD then relinquished these gains later in the afternoon. Federal Reserve policymaker Lorie Logan – one of the more hawkish Fed officials – said that the recent surge in US Treasury yields could negate the need for further interest rate hikes.

This evening, two more Fed policymakers are set to speak. Could a more aggressive outlook on policy help lift the US Dollar?

Pound (GBP) Mixed amid Lack of Data

The Pound (GBP) initially slipped yesterday as the anxious market mood dented the increasingly risk-sensitive currency’s appeal.

However, Sterling managed to recoup its losses against some of its weaker peers in the afternoon without a clear catalyst for the movement. A lack of UK data exposed the UK currency to market volatility.

With GBP data still thin on the ground today, we may see the Pound trade without a clear direction.

Euro (EUR) Softens following Weak German Data

The Euro (EUR) stumbled yesterday after German industrial production declined more than forecast.

Output in the Eurozone’s largest economy shrank 0.2%, versus the 0.1% contraction expected. This was the fourth consecutive month that production decreased.

Turning to today, European Central Bank (ECB) President Christine Lagarde will deliver a speech this afternoon. If she expresses concerns that rising energy prices could push inflation higher, EUR may find support.

Canadian Dollar (CAD) Climbs as Israel Conflict Drives Up Oil Prices

The crude-linked Canadian Dollar (CAD) marched higher on Monday as fighting in the Middle East saw oil prices soar due to fears of another supply shock.

Canadian economic data is in short supply again today. Could a pullback in crude prices see CAD stumble?

Australian Dollar (AUD) Retreats despite Strong Data

The Australian Dollar (AUD) briefly hit weekly highs overnight following an unexpected improvement in Australian consumer confidence. AUD then fell sharply, as profit-taking and a pullback in commodities dented the ‘Aussie’.

New Zealand Dollar (NZD) Falls as Commodities Decline

The New Zealand Dollar (NZD) traded in tandem with the ‘Aussie’, initially strengthening before the weakness in the commodity markets dragged the ‘Kiwi’ lower.

Samuel Birnie

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