What you should know on Wednesday, April 6:
The US dollar is the overall winner on Tuesday, firmly against all of its major rivals. Diminishing chances for a diplomatic solution to the Russia-Ukraine conflict and aggressive central banks were behind the market moves.
Earlier in the day, the Reserve Bank of Australia abandoned its patient stance, providing an unexpected boost to the local currency. Governor Philip Lowe removed the sentence “prepared to be patient” from his usual statement and hinted at an interest rate hike in June. The last time the RBA rose was in 2010. Lowe also said lawmakers will now focus on inflation and labor cost data. Australian federal elections will take place in May.
During the American afternoon, the governor of the US Federal Reserve, Lael Brainard, hinted at an aggressive reduction of the balance sheet and signaled that, combined with rate increases, it would bring monetary policy closer to neutrality by the end of this year. His words sent the 10-year Treasury yield to 2.567%, which now holds close.
Meanwhile, the EU is considering banning Russian coal imports as the US increases oil imports from Canada. French European Affairs Minister Beaune said a new round of sanctions against Russia would most likely be imposed on Wednesday.
The EUR/USD pair tumbled to 1.0900 while GBP/USD is trading around 1.3076. The AUD/USD pair managed to hold on to some of its post-RBA gains but turned down from a fresh 2022 high of 0.7660. USD/CAD is closing in on 1.2500 as crude oil prices dropped sharply, with WTI currently hovering around $100.00 per barrel.
Gold traded as high as $1,944.56 a troy ounce, and is now struggling around $1,920, amid renewed dollar demand.
The US FOMC will publish the Minutes of its last meeting on Wednesday.
Source: Fx Street
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