We saw a continuation yesterday of many of the patterns we saw on Tuesday, with markets beginning to normalise slightly after the chaotic conditions seen on Monday. Comments made by Vladimir Putin yesterday seemed to further diffuse the situation, as he stated that troops sent to Ukraine were only looking to ensure the security of Russia’s Black Sea naval fleet, which is stationed in Crimea. The result of this was a further sell-off of safe-haven assets like the Japanese yen and Swiss franc, continuing on from what we saw on Tuesday. We saw the yen drop back to two-week lows against sterling, eradicating all the gains it achieved over the weekend. The franc showed similar weakness.
The standout performer was the Australian dollar, which, despite clocking in only small gains against a strong sterling, gained against the majority of its most traded peers. This was following better-than-forecast growth figures released overnight on Tuesday. The currency remains historically very weak, and the general forecasts are not positive, but yesterday’s figures show that there may be some unexpected scope for Aussie dollar strength. This positivity was reinforced as better than expected data for January and February boosted the Australian dollar overnight. Later today we have building permits and economic health figures out of Canada. The figures could support the Canadian dollar further, which strengthened yesterday after interest rates were held at 1%.
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