US dollar continues upward surge
Daily Currency Update
The USD continued its upward surge and marched towards a 5-year high on Wednesday, buoyed by growing concerns over the global economic outlook and expectations for even more aggressive monetary tightening from the Federal Reserve.Renewed concerns over an economic slowdown in China due to COVID-19 lockdowns have fueled demand for the safe-haven US dollar. The US Dollar Index was up 0.73% at around 103.05 at the time of writing.
The price of oil climbed after Russia cut natural gas supplies to Poland and Bulgaria, which isn't good news for Europe's energy crisis. Russia has decided to cease supply in response to each country’s decision not to pay for its gas in rubles, which has mounted severe pressure on the euro.
Like the Bank of England, policymakers at the European Central Bank have a difficult path regarding controlling rising prices in the face of slowing economic growth. If more European countries are threatened with gas cut-offs then the shared currency could be heading towards parity versus the super-strong US dollar.
EURUSD was down 0.85%, trading around 1.0547 at the time of writing.
Key Movers
Wednesday continued to be a tough day for the pound, with GBPUSD being forced lower by concerns over the UK economy and geopolitical risks driving investors to the safety of the US dollar. GBPUSD has dipped to its lowest level since July 2020, as Russia announced that it is going to turn off the taps on its gas supply to Poland and Bulgaria. The pound’s cause is not being helped by concerns about the consumer spending squeeze which manifested itself in a weak March retail sales reading last week. High inflation is meaning households are having to rein in spending, and with commodities traded in US dollars in global markets, it means the drop in GBPUSD could lead to even higher inflation than previously thought later in the year. GBPUSD was trading around 1.2544 at the time of writing.
Expected Ranges
- EUR/USD: 1.0525 - 1.0663 ▼
- GBP/USD: 1.2509 - 1.2618 ▼
- AUD/USD: 0.7104 - 0.7191 ▲
- USD/CAD: 1.2778 - 1.2851 ▲