Markets were notably swayed by the re-ignited tensions between Russia and Ukraine yesterday. As Russian stocks dropped off so did the rouble, to 3-week lows. European Union foreign ministers who gathered yesterday for an emergency meeting stated that the bloc should begin imposing its third round of sanctions on Russia, which should include economic measures. These announcements injected renewed uncertainty in the marketplace, and as a result we saw safe-haven assets perform well yesterday, with the Swiss franc and Japanese yen both strengthening.
Under such circumstances one would usually see commodity-backed currencies perform badly, but both the Australian and Canadian dollars traded in a narrow range in anticipation of Wednesday’s growth and industrial production figures out of China. With the figures from the world’s second largest economy likely to have a big impact on the currencies, traders were reluctant to make any bold moves before the figures are released. Overnight last night we had monetary policy meeting minutes out of Australia, and later today we have manufacturing sales and inflation data out of Canada and New Zealand respectively.
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