Foreign Exchange report
The Pound is trading higher against the Euro as tensions in Ukraine escalated over the weekend and as the President of the European Central Bank warned that the continuingly strong Euro will need the ECB to introduce monetary stimulus measures. Sterling was also supported by a report released over the weekend which showed that UK house prices advanced again this month. With a lack of data for the UK due today we can expect the currency to see relatively light trade.
The US Dollar found support against a number of peers as demand for safer currencies increased over the weekend. Gun battles between Ukrainian forces and pro-Russian gunmen in the east of the troubled nation raised concerns of a possible military conflict between the two sides. The ‘Greenback’ could rise further later in the session if today’s retail sales data comes in strongly.
The Euro declined against all of its major peers after European Central Bank President Mario Draghi said that the currency’s strength will require the bank to introduce further monetary stimulus. Also weighing on the single currency was the flare up of violence in Ukraine which spooked investors and raised the possibility of a military conflict between Ukraine and Russia.
The ‘Aussie’ recovered from Friday’s losses and made gains against several major peers as it found support from optimism over the strength of the local economy and as the ECB signalled that it could introduce monetary stimulus measures in the Eurozone. With a lack of data due to be released today the ‘Aussie’ is likely to experience relatively light trade.
New Zealand Dollar
The New Zealand Dollar held onto gains against the US Dollar as investors raised their expectations that Federal Reserve Chairman Janet Yellen could clarify the Fed’s position as to when it will begin to increase interest rates when she addresses a conference on Tuesday. The ‘Kiwi’ could come under pressure if the situation deteriorates and damages demand for riskier assets.
The Canadian Dollar made gains against its US relation and other peers as the worsening situation in Ukraine sent the price of crude oil, Canada’s biggest export higher. The West and Ukraine blamed Russia for being behind violence seen over the weekend raising tensions and the possibility of a military confrontation.
South African Rand
The Rand tumbled to a one-week low against the US Dollar and fell against the majority of its peers after it tracked the Euro lower and took a hit from a decline in risk appetite. Comments over possible monetary stimulus in the Eurozone caused the Rand to fall as Europe is a major consumer of South African exports. The renewed concerns over Ukraine also weighed heavily upon the Rand.