Sterling has been blasted lower after Bank of England governor Mark Carney cast doubt on a previously pretty-much-expected UK May rate hike. The European Union's rejection of Britain's latest Brexit-Irish border plan only served to deepen the rot. "The sterling rally is pretty much done and dusted," says John Hardy, Saxo's head of FX strategy.
"The most volatile currency this week has been GBP. Carney was trying to peddle the message that while he does see rate hikes out in the future, there is also weakness in the UK economy," Hardy adds.
For sterling, these factors mean that poor sentiment will persist pending "something very dramatic" on the Brexit front.
Elsewhere, the Australian dollar is reversing lower against it US counterpart, but higher against the kiwi while the greenback itself is perking up on the back of weakening risk appetite and higher US bond yields.
Meanwhile, over in equities, Saxo Bank head of equity strategy Peter Garnry says that the situation surrounding the beleaguered Rusol aluminium producer "has been catapulted to the highest level". US sanctions against Russia are preventing the company from selling its wares and this is beginning to have a negative impact on the global car industry, especially in Europe.
"In a worst-case scenario this could have a material impact on European growth," Garnry says.
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.