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US dollar stronger across the board

Daily Currency Update

The United States and Europe are set to announce new sanctions on Russia today. The European Commission has already proposed new sanctions including banning Russian coal imports and halting trade worth nearly 20 billion euros. The White House said late on Tuesday that its new measures will target Russian banks and officials and ban investment in Russia. This has seen further gains for the US dollar and weakness in the euro yesterday, with Sterling falling below 1.3100 against the US dollar and breaking 1.2000 against the euro. Investors tend to favour safe haven currencies such as the US dollar during uncertain times.

Macroeconomic data has been thin on the ground so far this week, but this evening all eyes will be on the FOMC meeting minutes due for release at 7pm. Comments from US Federal Reserve’s Lael Brainard yesterday about taking monetary policy to a "more neutral position" later this year has raised expectations of aggressive interest rate rises by the US central bank.

This puts the focus firmly on the release of the minutes from the Fed's last policy meeting, with investors looking for clues over the likelihood of a 50-basis point hike at the US central bank's next meeting in May. US dollar gains could continue in today’s session if both sanctions and the aggressive rate hikes are confirmed.

Key Movers

The euro has lost a lot of ground against the pound and US dollar so far this week. A fresh round of sanctions is expected to be imposed on Russia today and these will be scrutinised by market participants on how they could affect European growth and whether it will force a recession in some of its member countries. In France recent election polls have shown a fall in President Emmanuel Macron’s lead over candidate Marine Le Pen. The National Rally leader has previously discussed exiting Europe and the euro.

The euro is back below 1.0900 against the US dollar, touching 1.0875 earlier this morning, and the pound has broken 1.2000 against the euro. Euro weakness will likely be a theme over this week with so many events of concern to the currency.


Expected Ranges

  • GBP/USD: 1.3010 - 1.3100 ▼
  • GBP/EUR: 1.1960 - 1.2030 ▲
  • GBP/AUD: 1.7180 - 1.7270 ▲
  • EUR/USD: 1.0830 - 1.0940 ▼