Pound (GBP) Mixed as Deutsche Bank Warns of UK Recession
The Pound (GBP) struggled to make gains against its safer rivals today, but was buoyed against its riskier competitors today. The worsening Ukraine-Russia conflict has limited risk appetite in the markets.
A sustained dovish outlook from Bank of England (BoE) policymakers likely weighed upon Sterling however. Speaking on Monday, BoE Deputy Governor Jon Cunliffe explained how he felt that repeated rate hikes may not be necessary to tame high inflation. Warnings from Germany’s Deutsche Bank that the UK faces an imminent recession may have also kept pressure on GBP today.
With no significant data left for Sterling this week, the currency’s movements are likely to continue to be dictated by global risk appetite.
Euro (EUR) Climbs Despite War in Ukraine
The Euro (EUR) overcame geopolitical headwinds to climb higher against many of its rivals today. The single currency benefitted from a pullback in the US Dollar (USD) ahead of the release of the FOMC minutes. EUR also benefited from an uptick to German bond yields today.
In relation to the war in Ukraine, the upside in the single currency may have been capped today from reports indicating that the US and EU are planning a further round of economic sanctions against Russia. The proposed measures include a ban on Russian coal imports and ceasing transactions with four key banks.
The rest of the week for the Euro is set to bring Eurozone retail sales for February on Thursday. Should these figures rise as forecast then it could boost the single currency. Thursday will also see the publication of the European Central Bank’s (ECB) Monetary Policy Meeting Accounts. This data could drive movement in EUR depending on the ECB’s forward guidance.
US Dollar (USD) Subdued Ahead of FOMC Minutes
The US Dollar (USD) saw limited gains today. Whilst a risk-averse market mood kept investors focused on the safe-haven ‘Greenback’, bets remained limited ahead of the release of FOMC minutes later on Wednesday.
USD remained bolstered amid hawkish comments from Federal Reserve policymaker Patrick Harker however. Harker stated that he saw a ‘series of deliberate, methodical hikes as the year continues’, and that inflation is currently running ‘far too high’.
Looking ahead, the release of FOMC minutes on Wednesday is likely to boost USD if they echo the central bank’s previously stated hawkish stance. A number of speeches from Fed policymakers on Thursday could have a similar effect.
Australian Dollar (AUD) Drops despite Commodities Rally
The Australian Dollar (AUD) slumped against its competitors today amid a risk-off mood in the markets today. Major losses for the ‘Aussie’ were likely limited by a further rally to commodity prices. The rally came amid the possibility of further sanctions on Russia. Additionally, hawkish signals from the Reserve Bank of Australia (RBA) on Tuesday may have limited any dramatic falls.
With no significant data for AUD over the rest of this week, the currency’s movements are likely to be dictated by commodity prices and global risk appetite.
Canadian Dollar (CAD) Dips as Oil Prices Slide
The Canadian Dollar (CAD) has remained changeable against its rivals today, trending down against the majority at the end of the day’s session. The commodity-pinned ‘Loonie’ has suffered from volatile movements in the crude oil market after multiple EU states rejected calls to sanction Russian oil.
Looking ahead for CAD, employment figures are forecast to show a slowdown in the country’s labour market. This could push the currency higher should investors see it as cause for the Bank of Canada (BoC) to raise interest rates.