Australian Dollar Jumps as Confidence Returns to Pre-Covid 19 Levels

Australian Dollar (AUD) Rallies as Consumer Confidence Recovers

The Australian Dollar (AUD) made gains during yesterday’s session as data showed consumer sentiment rallied for the second month in a row after a historic loss during the peak of the pandemic.

The increase in ‘Aussie’ sentiment is a promising sign for consumer spending and the overall economy as confidence returned to pre-coronavirus levels. However, gains were capped as investors worried about deteriorating Australia-China relations.

Looking ahead, traders will continue to monitor tensions between Canberra and Beijing. Any further deterioration in relations is likely to prevent the currency from making gains if risk appetite continues to improve.

Pound (GBP) Struggles Against Brexit Headwinds

The Pound (GBP) was mixed on Wednesday, rising against a weak US Dollar (USD) as the Federal Reserve meeting approached. However, the British currency was flat against the Euro as the country’s recovery from the coronavirus crisis and ongoing Brexit uncertainty weighed on GBP.

Looking ahead, Pound traders will continue to monitor UK-EU trade relations for signs there may be a breakthrough in negotiations.

Euro (EUR) Mixed as EU Accuse UK of ‘Cherry Picking’ Brexit Discussions

The Euro (EUR) was able to edge higher against the US Dollar, although suffered losses against more risk-sensitive currencies such as the New Zealand Dollar (NZD). Post-Brexit trade negotiations weighed on the single currency as the bloc’s top Brexit negotiator, Michel Barnier, accused Britain of ‘cherry picking’ in discussions.

The single currency is likely to suffer further losses today if statistics from Italy reveal industrial production plummeted further than expected in April.

US Dollar (USD) Slumps to Three-Month Low

The US Dollar (USD) slumped to a three-month low on Wednesday on speculation the US Federal Reserve would announce that it intends to keep the recent rise in bond yields in check. Concerns over any further measures or a statement from policymakers left the safe-haven currency under pressure.

Traders will be looking to the latest US initial jobless claims data which could send the currency lower. If in the increase in jobless claims continues to ease, rising by the lowest amount since mid-March, it will support increased risk sentiment.

Canadian Dollar (CAD) Slides as Oil Prices Fall -1%

The Canadian Dollar (CAD) slumped on Wednesday as oil prices plummeted more than 1%, falling below $41 a barrel after a report revealed crude inventories in the US increased. This sparked concerns about oversupply and weak demand due to the coronavirus crisis.

If oil prices continue to slide today, the oil-sensitive ‘Loonie’ is likely to extend yesterday’s losses and slump further.

New Zealand Dollar (NZD) Boosted by Weaker USD

The New Zealand Dollar (NZD) made gains during Wednesday’s session as a weaker US Dollar boosted riskier assets. Looking ahead, the ‘Kiwi’ could continue to benefit from a rise in risk appetite, although weak consumer confidence could limit any gains.

 

Data Releases

June 11th 12:00                  AUD                       Consumer Inflation Expectations (June)              4%

June 11th 19:00                  EUR                       Italy Industrial Production (April)                         -28.8%

June 11th 23:30                  USD                       Initial Jobless Claims (6 June)                                1500K

June 11th 23:30                  USD                       PPI (May)                                                                     0%

June 12th 08:00                 NZD                      Westpac Consumer Confidence (Q2)                      102

June 12th 09:30                 NZD                      Business NZ PMI                                                         28

Louisa Heath

louisa.heath@torfx.com


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