The U.S. Dollar Index is mostly unchanged this morning but there are plenty of movements against individual rivals, including a 0.3% rally against the Euro.
Overview
Global risk sentiment is strong this morning and stocks are looking to build on yesterday’s rally. A severe threat from the omicron variant of Covid-19 seems less likely as more data shows that hospitals have not been overrun with cases. There was also hopeful news on the vaccine and antibody treatment front. China also pledged measures to support economic growth in the world’s second-largest economy, giving risk sentiment an added boost.Geopolitical threats remain, however, and could throw cold water on the risk rebound. Bloomberg reports that the U.S. and Europe are weighing banking sanctions against Russia if they invade Ukraine. President Biden has a call scheduled with Russian leader Vladimir Putin this morning as tensions remain high.There is no major economic data or Fed speakers again on today’s docket so currency markets will have to take their cues from the prevailing risk sentiment and developments abroad. Volatility has remained elevated over the last few weeks, and we can expect more of the same today.
What to Watch Today…
- No major economic events scheduled for today
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EUR
The Euro is under pressure this morning, falling significantly against commodity-based currencies and dipping 0.3% versus the greenback. The fall comes a day after the common currency was under pressure yesterday following tepid economic data. Data today was a touch better with the ZEW index topping estimates, still, the Euro was unable to advance. EUR/USD is at the lowest rate since November 30th.
AUD
The Australian dollar is rallying this morning on a combination of positive comments from the Reserve Bank of Australia and as China acts to boost the regional economy. Australia’s central bank kept its policy on hold and its interest rate at a record low of 0.1%, as expected. The RBA said that it does not expect the omicron variant to derail the nation’s economy and instead focused on positive signs in the labor market. Governor Philip Lowe commended the country on their high rate of vaccination as a reason the economy could continue to rebound. While the Aussie has gained nearly 1% this morning, it is still down almost 4% from a month ago.
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