Euro Rocked by Russia-Ukraine Tensions, US Dollar Undermined by Dovish Fed Minutes
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 Fluctuates amid Russia-Ukraine Uncertainty
The Euro traded in a wide range this week as the single currency flip-flopped amidst uncertainty over the situation between Russia and Ukraine. The prospect of a war on the EU’s doorstep unsurprisingly rattled EUR investors leading the Euro to fluctuate amidst conflicting reports on whether or not Russia withdrew some of its troops from the border.
The publication of the Eurozone’s latest PMI figures will be the primary focus for EUR investors next week, with the Euro potentially weakening if activity in the bloc’s private sector remained fairly subdued this month.
Top EUR data releases:
Feb 21 EUR Manufacturing PMI (Feb)
Feb 21 EUR Services PMI (Feb)
Feb 22 EUR German IFO Business Climate (Feb)
USD – US Dollar Dented by Dovish FOMC Minutes
The US Dollar initially started the week on strong footing, with fears over the Ukraine crisis bolstering demand for the safe-haven currency. However, the US Dollar was then placed on the defensive in the latter half of the week after the minutes from the Federal Reserve’s January policy meeting proved to be more dovish than expected and dented expectations for a half-percentage increase in interest rates next month.
Turning to next week’s session, the focus for USD investors will be likely be on the latest PCE price index as an uptick in the Fed’s preferred measure of inflation could bolster the US Dollar if it revives expectations for an aggressive rate hike in March.
Top USD data releases:
Feb 24 USD GDP (Q4)
Feb 25 USD Durable Goods Orders (Jan)
Feb 25 USD PCE Price Index (Jan)
GBP – Pound Firms as Rising Inflation Bolsters BoE Rate Hike Expectations
The Pound trended broadly higher over the past week as UK inflation printed at a 30-year high in January, bolstering expectations the Bank of England (BoE) may continue its recent pace of aggressive interest rate hikes. These gains were tempered somewhat by ongoing concerns over the cost-of-living crisis however, after the UK’s jobs report highlighted how wage growth continues to lag behind inflation.
Looking ahead, the UK’s latest PMI release will in the spotlight at the start of next week. February’s preliminary figures are expected to report an acceleration of growth in the UK’s private sector, which might help to boost the Pound.
Top GBP data releases:
Feb 21 GBP Manufacturing PMI (Feb)
Feb 21 GBP Services PMI (Feb)
Feb 24 GBP CBI Distributive Trades (Feb)
AUD – Australian Dollar Gains Tempered by Mixed Jobs Figures
After initially falling as risk-sentiment soured, the Australian Dollar was able to strengthen against most of its peers this week amidst a subsequent improvement in market sentiment. However these gains were tempered somewhat in the latter half of the week on the back of mixed Australian jobs data.
AUD investors are likely to focus on the release of Australia’s latest wage price index next week. Could a bump in wage growth help to bolster the ‘Aussie’?
Top AUD data releases:
Feb 20 AUD Manufacturing PMI (Feb)
Feb 20 AUD Services PMI (Feb)
Feb 23 AUD Wage Price Index (Q4)
ZAR – Rand Firms in spite of Volatile Market Risk Appetite
The South African Rand maintained a fairly bullish trajectory this week, with the emerging market currency largely defying uneven market risk appetite. This uptick in the Rand was supported by a strong inflation reading which bolstered expectations the South African Reserve Bank (SARB) will continue to raise interest rates this year.
The spotlight for ZAR investors next week will no doubt be the 2022 Budget as they look to see how the minister of finance plans to cover the cost of the promises made by President Cyril Ramaphosa in his State of the Nation Address earlier in the month.
Top ZAR data releases:
Feb 22 ZAR Unemployment Rate (Q4)
Feb 23 ZAR 2022 Budget
Feb 24 ZAR PPI (Jan)
CAD – Canadian Dollar Fluctuates amid Oil-Price Volatility
Trade in the Canadian Dollar was mixed this week, as fluctuating oil prices infused some volatility into the commodity-linked currency, while a hotter-than-expected inflation reading failed to provide any sustained support.
In the absence of any notable CAD data releases next week, the direction of the Canadian Dollar is likely to continue to be influenced primarily by oil prices, potentially leading to fresh gains if prices push closer to $100 a barrel.