Australian Dollar Lifted by Renewed Trade Optimism
The Australian Dollar traded robustly on Monday, with the risk sensitive currency finding support from positive headlines regarding US-China trade negotiations. The South China Morning Post reported that US trade officials will soon meet with Chinese Vice-Premier Liu He for the first face-to-face meeting since May, stoking hopes that talks are progressing in a positive direction.
In the absence of any notable Australian economic data today, expect the focus for AUD investors to remain on US-China trade headlines as markets seek to gauge how close the two may be towards a new deal.
Pound Shaken by Tory Resignations
The Pound (GBP) got off to a poor start this week, trending lower against the majority of its peers as a number of top Conservatives prepared to resign as they brace for what is widely expected to be Boris Johnson’s victory in the Tory leadership contest. The results of the election are scheduled to be published early on Wednesday, with Sterling sentiment likely to dip as a Johnson premiership is expected to increase the risks of a no-deal Brexit.
In the meantime, potentially impacting the Pound during today’s European session will be a speech by the Bank of England’s (BoE) Andy Haldane, with Sterling potentially weakening if Haldane appears dovish in his outlook for monetary policy.
Euro Subdued as ECB Speculation Rises
The Euro (EUR) was broadly muted against its other peers at the start of the week as a result of European Central Bank (ECB) speculation. The ECB is holding its July policy meeting this week and analysts are split on whether the back will simply alter its forward guidance this month, or whether it will attempt to stay ‘ahead of the curve’ by announcing a rate cut of 10 basis points on Thursday.
Coming up later tonight we have the publication of the Eurozone’s latest consumer confidence figures, which could see the Euro move lower if sentiment in the bloc grew increasingly gloomy this month.
US Dollar Mixed as Trump Tweets Fed Criticism Again
The US Dollar (USD) initially strengthened yesterday as tempered Federal Reserve rate cut bets helped to strengthen the ‘Greenback’. However, the US Dollar was forced to relinquish some of these gains later in the day as Donald Trump waded into the interest rate debate once again, with his continued Twitter attacks on the Fed appearing to undermine confidence in the bank’s independence.
In focus for USD investors later tonight will likely be the latest US housing data, which could exert some pressure on the US Dollar if existing homes sales fell in line with expectations in June.
Canadian Dollar Weakens as Oil Unable to Sustain Recovery
The Canadian Dollar (CAD) initially rallied on Monday, with the oil-sensitive currency being bolstered by sharp rises in crude prices due to heightened tensions in the Middle East. However these gains proved short-lived, with the ‘Loonie’ falling back as the oil rally began to fade during the US trading session.
Risk-on Mood Turbo Charges the New Zealand Dollar
The New Zealand Dollar (NZD) was the clear winner in currency markets on Monday, with the ‘Kiwi’ accelerating against the majority of its peers after breaking through previous resistance levels thanks to a risk-on mood prevailing in markets.
However without any clear follow up we may see NZD exchange rates relinquish some ground today ahead of Wednesday’s trade figures.
Data Releases
July 23rd 08:30 AUD RBA Kent Speech
July 23rd 20:00 GBP CBI Industrial Orders (Jul) -15
July 23rd 22:20 GBP BoE Haldane Speech
July 24th 00:00 EUR Consumer Confidence (Jul) -7.2
July 24th 00:00 USD Existing Homes Sales -0.4%