Euro Plummets as Russia’s Invasion of Ukraine Intensifies, US Dollar Benefits from Risk-Off Flows

Find out how the major currencies have been performing and what movement we could see in the days ahead with our weekly exchange rate update.

 

EUR – Euro Nosedives as Russia-Ukraine War Intensifies

The Euro plunged to new multi-month lows this week as EUR investors grew increasingly concerned about the war in Eastern Europe and the potential impact on the Eurozone economy. These concerns overshadowed all EUR data, in spite of figures showing Eurozone inflation rocketed to a record high of 5.8% last month.

Looking ahead, there looks to be little chance of a reprieve for the Euro next week as the European Central Bank (ECB) is likely to revert to a more dovish outlook at its upcoming policy meeting in light of currency geopolitical uncertainty.

Top EUR data releases:

Mar 7 EUR German Factory Orders (Jan)

Mar 8 EUR German Industrial Production (Jan)

Mar 10 EUR ECB Interest Rate Decision

 

USD – US Dollar Firms as Risk Appetite Falters

The US Dollar trended broadly higher through this this week’s session as a prevalent risk-off mood bolstered the currency’s safe-haven appeal. Reinforcing the US Dollar’s gains was the latest US non-farm payroll print, which revealed domestic employment growth jumped to a seven-month high in February.

In addition to the crisis in Ukraine, the US Dollar will also be influenced by the publication of the US consumer price index next week. Another jump in US inflation could reinforce Fed rate hike expectations and propel the US dollar sharply higher.

Top USD data releases:

Mar 9 USD JOLTs Jobs Openings (Jan)

Mar 10 USD Inflation Rate (Feb)

Mar 11 USD Consumer Sentiment (Mar)

 

GBP – Pound Dented by Gloomy Trade

The Pound spent much of this past week on the defensive, with GBP investors growing increasingly unnerved by the situation in Ukraine. This appeared largely driven by expectations the Russia-Ukraine war will push inflation even higher, placing even more pressure on UK consumers at a time when they are already facing a cost-of-living crisis.

The release of the UK’s latest GDP figures will be in the spotlight for GBP investors next week, with the Pound potentially strengthening if growth rebounded in January as expected.

Top GBP data releases:

Mar 11 GBP GDP (Jan)

Mar 11 GBP Industrial Production (Jan)

Mar 11 GBP Balance of Trade (Jan)

 

AUD – Australian Dollar Firms as Upbeat Data Offsets Downbeat Mood

In spite of the situation in Ukraine weighing on market sentiment throughout the week, the Australian Dollar was able strengthen through most of the session. This uptick in the ‘Aussie’ came on the back of some upbeat domestic data, with Australia’s latest GDP, retail sales and PMI data all beating forecasts.

Looking ahead, a speech by Reserve Bank of Australia (RBA) Governor Philip Lowe may be the primary focus for AUD investors next week. Will a cautious outlook from Lowe weaken the Australian Dollar?

Top AUD data releases:

Mar 8 AUD Business Confidence (Feb)

Mar 8 AUD RBA Lowe Speech

Mar 8 AUD Consumer Confidence (Mar)

 

ZAR – Rand Losses Tempered by Soaring Commodity Prices

The South African Rand trended broadly lower this week as the situation in Ukraine sapped market risk appetite and weakened the appeal of emerging market currency. However, the Rand weathered the storm a little better than some of its peers, as a strong uptick in commodity prices was able to limit the pressure on ZAR exchange rates.

The release of South Africa’s latest GDP figures may provide an alternative catalyst of movement for the Rand next week. Will a strong rebound in growth in the fourth quarter help to buoy ZAR exchange rates?

Top ZAR data releases:

Mar 8 ZAR GDP (Q4)

Mar 10 ZAR Business Confidence (Q1)

 

CAD – Canadian Dollar Underpinned by Oil Price Rally

The Canadian Dollar struck higher this week as the appeal of the oil-sensitive currency was bolstered as crude prices soared to a ten-year high. This uptick in the ‘Loonie’ was supported by the Bank of Canada (BoC) decision to raise interest rates for the first time since 2018.

Looking ahead, so long as oil prices continue to rise the Canadian Dollar is likely to maintain its bullish trajectory, although another lacklustre employment release could temper these gains in the latter half of next week.

Top CAD data releases:

Mar 8 CAD Balance of Trade (Jan)

Mar 11 CAD Unemployment Rate (Feb)