Risk off sentiment follows the RBA’s decision to leave rates unchanged
Daily Currency Update
The Reserve Bank of Australia (RBA) decided to leave its policy rate unchanged at 4.1% against some expectations of a 25-bps hike. The decision caused a sell-off in AUD's value and the USD to benefit from risk-off appetites. AUDUSD dropped by more than 1% falling below 0.6650.The euro continued its downward trend this morning as EURUSD dropped from around 1.0995 to a low of 1.0970 at the European market open. Manufacturing PMI for the eurozone came in as expected at 42.7 and the unemployment rate for the block is due to come in unchanged from the prior month.
Recession fears in the UK are adding downward pressure to Sterling. Investors and markets are currently cautious in the build-up to the Bank of England's interest rate decision this Thursday. Markets are all but certain that the BoE is set to hike by at least 25 bps since UK inflation remains persistent at four times the central bank's target rate of 2%. A couple of key reasons for such high inflation in the UK are the country's labor shortage and current high food prices.
Key Movers
USA PMIs is to be released later this afternoon which could add further fuel to USD's current increase in value. The eurozone unemployment rate may cause some movement if the release comes in different from the expectation of 6.5% (same as the previous month). Eyes are focused on the BoE decision later in the week following the RBA's decision to leave rates this morning.Expected Ranges
- GBP/USD: 1.2760 - 1.2885 ▼
- GBP/EUR: 1.1635 - 1.1700 ▲
- GBP/AUD: 1.9050 - 1.9355 ▲
- EUR/USD: 1.0940 - 1.1045 ▼