Australian Dollar Slumps on RBA Speculation
The Australian Dollar (AUD) fell in sympathy with the New Zealand Dollar (NZD) yesterday as a larger-than-expected rate cut from the RBNZ spooked markets. AUD investors fear that the aggressive cut will put more pressure on the Reserve Bank of Australia (RBA) to continue easing monetary policy.
Looking ahead, we may see the Australian Dollar face further pressure today as Chinese trade figures are expected to show that imports contracted again last month.
Pound Sterling (GBP) Dented by Brexit Warning
The Pound (GBP) fell during yesterday’s trading session as persistent Brexit uncertainty continued to cast a shadow over the currency. The latest slump comes as Boris Johnson’s most senior adviser Dominic Cummings warned MPs that a vote of no-confidence in the PM would not stop him from pursuing a no-deal Brexit.
In the absence of any notable UK economic data today, we expect Brexit to remain the main catalyst of movement in Sterling, likely keeping the pressure on GBP exchange rates.
Euro Retreats despite Gloomy German Industrial Data
The Euro (EUR) trended higher on Wednesday, accelerating on the back of a weakened US Dollar (USD) in spite of some gloomy Germany industrial data. Destatis reported German industrial production fell sharply in June, spooking EUR investors who fear this bodes poorly for domestic growth in the second quarter.
Coming up today we may see the publication of the European Central Bank’s (ECB) economic bulletin put some pressure on the single currency as it likely reinforces the ECB’s dovish outlook for the remainder of 2019.
US Dollar Muted on Fed Rate Cut Speculation
The US Dollar (USD) trended lower during yesterday’s session on the back of rising expectations of an aggressive rate cut from the Federal Reserve next month. According to CME Group’s FedWatch tool, the odds that the Fed will cut rates by 50 basis points in September leapt from 15% to 35% on Wednesday as a result of rising US-China trade tensions.
Expect to see this rate cut speculation continue to influence USD exchange rates today amidst a continued lull in US economic data.
Canadian Dollar Struggles as Oil Falls to $59 a Barrel
The Canadian Dollar (CAD) fell back on Wednesday as the slump in oil continued, with Brent crude striking as low as $56 a barrel and limiting the appeal of the oil-sensitive ‘Loonie’.
New Zealand Dollar Nosedives on RBNZ Rate Cut
The New Zealand Dollar (NZD) was the main market mover yesterday, falling as much as 2% during the Asian session in response to the Reserve Bank of New Zealand’s (RBNZ) latest policy decision. Markets were shocked by the RBNZ’s decision to cut rates by 50 basis points this month as well as the bank’s suggestion that further cuts may be incoming.
Data Releases
August 8th 13:00 CAD Trade Balance $40bn
August 8th 18:00 EUR ECB Economic Bulletin