Australian Dollar (AUD) Reverses Losses After Hitting 10-Day Low
The Australian Dollar (AUD) rose higher at the end of the week as traders paused from cashing in their latest profits, which reversed the earlier sell-off seen during in the Asian trading session.
The ‘Aussie’ slumped to a ten-day low during Asian trading on Friday but was able to claw back these losses as risk sentiment improved.
Looking ahead, the Australian Dollar could benefit from upbeat Chinese data today. If industrial production shows signs the economy is picking up after the coronavirus crisis, it will buoy AUD.
Pound (GBP) Strengthens despite Record Contraction in GDP
The Pound (GBP) strengthened at the end of the week despite data showing Britain’s economy suffered a record contraction of 20.4% in April. Stronger appetite for riskier assets buoyed GBP despite the record low data and ongoing Brexit risks.
Looking ahead, Brexit risks will continue to weigh on the currency. Also, Sterling could suffer losses as traders eagerly await this week’s Bank of England (BoE) monetary policy meeting, where talk of negative rates may dampen optimism.
Euro (EUR) Remains Near Earlier Three-Month High
The Euro (EUR) rose against its main rival, the US Dollar, at the end of the week as the single currency stayed near its three-month high reached just days before.
However, the Euro surrendered gains against riskier assets after risk sentiment improved. Data also showed the bloc’s industrial production plummeted, although this likely marked the bottom of activity in the Eurozone.
Single currency traders will be looking to today’s Eurozone trade balance to see how the coronavirus pandemic affected April’s trade in the bloc. EUR will also remain under pressure as the EU faces tough negotiations over its recovery fund this week.
US Dollar (USD) Retreats as Risk Appetite Rebounds
The US Dollar (USD) slumped against a handful of currencies at the end of the week after making gains as the US Federal Reserve spooked markets.
The ‘Greenback’ struggled last week as hopes for a swift economic recovery from the coronavirus pandemic, easing tensions between Beijing and Washington, as well as the possibility of capped long-term yields in the US all weighed on USD.
Looking ahead, improved risk appetite and an upbeat New York Empire State Manufacturing Index could send the Dollar lower as traders flock to riskier assets.
Canadian Dollar (CAD) Jumps despite Fears of Coronavirus Second Spike
The Canadian Dollar (CAD) edged higher as risk appetite improved and oil prices edged higher on Friday. However, ‘Loonie’ gains were limited as oil prices were on track for the first weekly decline in seven weeks after the US saw a spike in coronavirus cases. Traders feared this could mean a second wave which would hamper demand.
Meanwhile, the Canadian Dollar could edge lower today following the release of April’s Canadian manufacturing sales which are expected to post a record decline.
New Zealand Dollar (NZD) Buoyed as Traders Flock to Riskier Assets
The New Zealand Dollar (NZD) rallied at the end of the week as risk appetite improved and traders flocked to riskier assets. Looking ahead, the ‘Kiwi’ is likely to benefit from upbeat data from China. If China’s industrial production picks up more than expected, it will buoy risk appetite.
June 15th 12:30 CNY Industrial Production (May) 4.5%
June 15th 20:00 EUR Trade Balance (April) €16.2B
June 15th 23:30 CAD Manufacturing Sales (April) -18%
June 15th 23:30 USD New York Empire State Manufacturing Index (June) -30