Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Australian inflation fall weighing on AUD
Global markets were mostly lower overnight as investors reacted to the uncertain economic impact of a tragic collision of a container ship into the Francis Scott Key Bridge in Baltimore, US.
The US’s Dow Jones index fell 0.1% while the Nasdaq dropped 0.4%.
In FX markets, the US dollar was moderately higher, with the USD index up 0.1%.
The Australian dollar was lower, down 0.1%, ahead of today’s monthly inflation report, forecast to tick up from 3.4% in January to 3.5% in February in annual terms.
Australian inflation has tumbled, down from 5.6% in September, causing the Reserve Bank of Australia to strike a more balanced tone at its most recent policy decision last week and weighing on the AUD/USD.
Swedish Riksbank to shift dovish
The Swedish Riksbank is expected to keep interest rates on hold at 4.00% tonight but shift its forward guidance to a more dovish policy rate path in response to mounting evidence of slowing inflation.
Most recently, the Riksbank stated inflation remains too high despite less risk of becoming entrenched, signaling rates could be cut sooner than previously projected.
We expect a similar decision this meeting, with a significant downward revision to the policy rate forecast currently showing the first cut possible in Q3 2025 – which we view as too hawkish.
Our bullish SEK outlook has strengthened given improving global economic momentum.
French consumer confidence steady
French consumer confidence has reflected a broader improvement across Europe with attitudes rebounding from a low seen in mid-2022 after the Russian invasion of Ukraine.
Looking ahead to tonight’s release, we’re looking for French consumer confidence to hold at 89 in March. However, the improvement in the Sentix survey indicates there may be upside risks.
The EUR/USD has seen a modest recovery over the past month but the pair most recently reversed from 2024 highs around 1.1000 and suggests the euro might be pressured further in the short term.
USD index (DXY) remains near top of the trading range
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 25 – 29 March
All times AEDT
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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