The start of the week was dominated by news from Ukraine and the easing tensions in the region. As a result, we saw an increase in confidence in the market, with emerging market stocks advanced by the most in a month on Tuesday. This bolstered their respective currencies, with the South African rand, Turkish lira, and Indian rupee showing strength throughout the first half of the week. Conversely, the traditionally safe-haven Japanese yen and Swiss franc both continued to be pegged back from the gains they had achieved the previous week as the global appetite for risk increased.
Yesterday the Australian dollar dropped off to month-long lows against sterling in response to Chinese manufacturing figures. Although coming in only marginally below forecast, the figures have had a marked impact on the Australian dollar historically. The Australian economy, rich in commodities, relies heavily on its exports, and with China being the primary export destination the health of the Chinese manufacturing industry has a direct impact on the Australian dollar. We saw a similar pattern with the Canadian dollar. Looking forward to today, quarterly inflation figures out Australia are the only significant data release.
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