Daily Currency Update
Demand for the US dollar climbed on Monday ahead of this week's monetary policy decision from the US Federal Reserve and as tensions continued to rise between Russia and Ukraine. With US inflation currently at a 40-year high of 7% there is pressure on Federal Chair Jerome Powell and the rest of the Federal Open Market Committee (FOMC) to act to tackle rapidly rising prices which is squeezing consumer spending power. The consensus is that the current quantitative easing program will be wound up by March with the possibility that rates will also be hiked by up to 0.5% at the same meeting on Wednesday. The US Dollar Index was up 0.32% trading at 95.95 at the time of writing.
Key Movers
The pound and the euro were lower on Monday as market jitters over the Russia-Ukraine situation led some investors to seek safe haven in the US dollar. Data also showed UK business activity grew less than expected in January, with the Purchasing Managers Index (PMI) hitting an 11-month low, but cost pressures stayed high. GBPUSD was down 0.65%, sitting around 1.3463, while EURUSD was down 0.31%, trading at 1.13082 at the time of writing. Commodity currencies like the Australian dollar and the Canadian dollar also suffered on Monday thanks to a strengthening USD.
Expected Ranges
- EUR/USD: 1.1291 - 1.1348 ▼
- GBP/USD: 1.3446 - 1.3566 ▼
- AUD/USD: 0.7093 - 0.7187 ▼
- USD/CAD: 1.2555 - 1.2676 ▲
- USD/MXN: 20.4314 - 20.6318 ▲