The Russian rouble recovered yesterday after starting the week on somewhat uncertain footing. The downing of the Malaysian Airlines plane, and the subsequent handling of the victims, led European leaders to enter talks in Brussels as to how best to handle the situation, with most pushing towards trade sanctions on Russia. As a result, the rouble was undermined over the weekend and into Monday, but yesterday saw a train carrying the bodies exit the rebel-held territory and enter the government-held city of Kharkiv. This gave the rouble support, and hence we saw it log gains against 31 of its most-traded peers.
It was a relatively quiet day elsewhere with the only movement coming from the Antipodean pair. The Australian dollar took strength following a speech from its central bank Governor. The last time he spoke he talked at length about how he felt the currency was overvalued, which pushed down the Australian dollar.
Little was mentioned of it yesterday – as a result, the currency logged gains against many of its peers. These gains were then boosted overnight by inflation hitting 3% annualised which increases the likelihood of interest rate rises. The New Zealand dollar lost ground, on the other hand, as markets anticipated the evening’s interest rate decision. With the general consensus over the last month or so being that we will see a hike in rates, much of it has been priced into the market already. It seems over the last few days, however, that confidence has dropped somewhat – triggering a sell-off from some traders. The only other event of note today are Canadian retail sales released this afternoon.
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