Euro and pound lead gains as oil revives rate‑hike talk
The euro and British pound were the strongest performers overnight as rising oil prices forced their respective central banks to consider rate hikes.
The European Central Bank warned that higher energy prices could have a “material impact” on inflation, even as it downgraded forecasts for growth and consumer spending. EUR/USD climbed 1.2%, while AUD/EUR slipped 0.3%.
In the UK, the Bank of England also signalled that rate hikes remain on the table. Policymakers said they were “ready to act”, with a unanimous decision suggesting the door to rate cuts has effectively closed. GBP/USD rose 1.3%.
Aussie jobs strong on the surface, patchy underneath
Australia’s latest employment report delivered mixed messages, leaving AUD/USD little changed. However, the Aussie gained later as the USD weakened, driven by gains in European FX.
February saw a solid headline gain of 49,000 jobs, but the composition was uneven. Part‑time employment surged by 79,000, while full‑time jobs fell by 30,000.
The ABS highlighted workers aged 65 and over as a key driver of the shift. The unemployment rate edged up to 4.3% as more people entered the workforce, though the underlying measure dipped to 4.2%. Hours worked rose faster than overall employment, pointing to resilient labour demand beneath the headline noise.
AUD/USD remains hostage to the cautious global mood and now sits around 2% below its recent high of 0.7187, last seen on 11 March.
Key support lies at the 50‑day EMA of 0.6978, followed by the 100‑day EMA at 0.6854.
Yen stalls as Bank of Japan stays cautious
The Bank of Japan left policy settings unchanged, holding its policy rate at 0.75%, in line with expectations.
Officials are balancing rising uncertainty from Middle East tensions against the need to assess the impact of December’s rate hike, keeping the bar high for any near‑term move. Governor Ueda struck a cautious tone, stressing that clearer evidence of wage‑driven inflation is needed before tightening again.
Higher oil prices are likely to lift inflation, particularly given Japan imports around 85% of its energy. At the same time, pricier fuel risks squeezing household incomes and dampening consumer spending.
To offset the impact, the government plans to release petroleum reserves and cap petrol prices at roughly ¥170 per litre. Even so, markets now see the next policy shift no earlier than June, pending more durable inflation and wage data.
USD/JPY is pressing towards the 160.00 level.
Key support sits at the 21‑day EMA of 157.88, followed by the 50‑day EMA at 156.78.
Euro, GBP lead gains
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 16 – 20 March
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*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.
