Daily foreign exchange update
The Pound slid to its lowest-level of the year yesterday against the Euro as a Bank of England policy maker talked down the currency and as the Central Bank came under pressure over a currency rigging scandal. The currency recovered some ground early this morning after trade balance data out of Germany came in below expectations. The Pound could recover further later in the session if today’s industrial and manufacturing production reports come in strongly. The NIESR is also due to release its latest GDP estimate.
The US Dollar gained ground as demand for riskier assets increased. The rise in demand came after Ukraine bolstered its defences and ordered its troops to training grounds as Russia refuses to leave the Crimea. Russian soldiers opened fire with automatic weapons in an attempt to capture a Ukrainian motorized battalion near the southern Crimean town of Bakhchisaray. The currency could find further support from the release of chain store sales and business optimism data.
The Euro weakened early in the session following the release of disappointing data out of Germany and as demand for safer assets increased due to the ongoing tensions in Ukraine. The currency does continue to find support from last week’s decision by the ECB to maintain interest rates at a record low level. The Euro softened after France warned that Europe would implement sanctions against Russia if it annexed Crimea.
The ‘Aussie’ was mixed against its peers as investors remain jittery following yesterday’s disappointing economic data releases out of China. Concerns over Ukraine are also weighing upon market sentiment. The currency was also knocked by the release of a business survey which showed that business conditions weakened last month.
New Zealand Dollar
The New Zealand Dollar rose against its U.S. counterpart on Tuesday, but gains were capped as disappointing Chinese trade balance data over the weekend continued to weigh on risk sentiment. Yesterday saw the ‘Kiwi’ hit a one-month high after a Bank of England official talked down the currency.
The Canadian Dollar slid against several peers after commodity prices fell following the release of the weak data out of China. The markets are jittery as speculation is high that the world’s second largest economy is slowing down.
South African Rand
The Rand is little changed against its peers as trading is expected to be subdued ahead of Thursday’s data releases. Investors are waiting for the latest mining and manufacturing data which should give a clearer picture of the health of Africa’s biggest economy.