Australian Dollar Slides as RBA Rate Cut Speculation Persists
The Australian Dollar (AUD) closed last week’s session on the back foot, as the currency continued to be pressured by growing expectations that the Reserve Bank of Australia (RBA) will cut rates for a third time later this year. On top of that, ‘Aussie’ was further pressured by an upswing in the US Dollar as it dragged on market risk appetite.
However there is the potential for AUD exchange rates to bounce back this week if domestic inflation accelerated in the second quarter as forecast.
Pound Sterling (GBP) Softens as EU Refuses to Back Down on Irish Backstop
The Pound (GBP) found itself trending lower at the end of last week as Boris Johnson and the EU remained at loggerheads over the issue of the Irish Border. Sterling sentiment soured as neither Johnson nor the EU showed any signs that they are likely to back down over the issue, stoking fears that the UK is staring down the barrel of a no-deal Brexit.
Looking to the week ahead, we may see UK politics take a bit of a back seat as the focus turns to the Bank of England (BoE), with a cautious outlook from the bank likely to dent Sterling.
Euro Mixed after ECB Kicks Rate Cut Down the Road
Trade in the Euro (EUR) was mixed on Friday as a lull in notable data left EUR investors to dwell on the European Central Bank’s (ECB) latest rate decision. This saw investors remain reasonably bullish towards the Euro, in spite of the bank signalling that some easing is likely to take place in September.
In focus for EUR investor this week is the publication of the Eurozone’s latest GDP figures, with an expected slowdown in growth in the second quarter likely to put some pressure on the Euro.
US Dollar Strengthens as US GDP Figures Dampen Fed Rate Cut Expectations
The US Dollar (USD) surged on Friday as USD investors welcomed the latest US GDP figures. With US economic growth slowing less than expected in the second quarter, we saw investors further temper their expectations for Federal Reserve rate cuts this year.
While the Fed is still expected to cut rates when it meets later this week, analysts suggest that in light of the continued momentum of the US economy this is not likely to be the start of a new easing cycle.
Canadian Dollar Muted as Oil Prices Stall
The Canadian Dollar (CAD) traded in a narrow range at the end of last week as a continued lull in domestic data and stalling crude prices left the ‘Loonie’ struggling to find momentum.
New Zealand Dollar Softens on Dovish RBNZ Expectations
The New Zealand Dollar (NZD) closed last week’s session on the back foot, with the ‘Kiwi’ giving ground as the prospect of another rate cut from the Reserve Bank of New Zealand (RBNZ) next month spooked some NZD investors.
Data Releases
July 29th 18:30 GBP Mortgage Approvals (Jun) 65,750