Written by - Amanda Dunn
Pound (GBP) finds support as markets reassess BoEbets
The pound (GBP) traded in a wide range yesterday, although it managed to push higher againstsome of its rivals as investors reined in bets on a Bank of England (BoE) interest rate cut.
With oil and gas prices soaring, market odds for a BoE rate cut in March dropped from 80% lastweek to just 29% this week.
The UK’s final services PMI for February may lend Sterling support today, if it confirms robustBritish service-sector activity last month.
Euro (EUR) struggles despite hotter inflation figures
The euro (EUR) fell against its stronger peers yesterday as EUR suffered from its strongnegative correlation with the surging US dollar (USD).
Hotter-than-forecast Eurozone inflation figures failed to provide the common currency with ameaningful upside, although the euro was able to find success against risk-sensitive rivals.
Turning to today, the Eurozone’s January unemployment rate is expected to show thatjoblessness held at a record low. This could underpin EUR later in the session.
US dollar (USD) continues to climb amid escalatingconflict
The US dollar extended its rally yesterday, with the dollar index hitting a six-week high, aswidespread risk aversion saw investors seek shelter in the safe-haven ‘greenback’.
Amid the escalating conflict in the Middle East, including fresh US strikes on Iran and an Israeliground offensive in Lebanon, anxiety rippled out through global markets.
This afternoon, the US ISM services PMI for February is due to be published, with a positivereading potentially buoying the ‘greenback’. Ongoing risk aversion could also underpin the USdollar.
Canadian dollar (CAD) hits multi-week highs as oil pricessoar
The crude-linked Canadian dollar (CAD) surged to multi-week highs yesterday as oil pricescontinued to march higher amid the conflict in the Middle East.
Canada’s services PMI could undermine the ‘loonie’ later today, if it reports a continuedcontraction in the sector. However, strong oil prices may offset the downside.
Australian dollar (AUD) subdued despite strong GDP
The Australian dollar (AUD) fluctuated overnight, with the ‘Aussie’ struggling to capitalise onstronger-than-forecast GDP figures amid a risk-off market mood.
New Zealand dollar (NZD) wobbles amid gloomysentiment
The New Zealand dollar (NZD) wavered overnight, although the risk-sensitive ‘kiwi’ managed toavoid losses despite a cautious tone in markets.
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