RBA Governor Lowe’s Comments Buoy the Australian Dollar

Australian Dollar (AUD) Jumps on RBA Lowe’s Comments

The Australian Dollar (AUD) rallied at the start of the week, with the growing fears of a second wave of the coronavirus pandemic doing little to dampen risk appetite amongst investors.

The ‘Aussie’ was buoyed by comments from the Reserve Bank of Australia’s (RBA) Governor, Philip Lowe. The bank’s chief said the impact of the coronavirus pandemic would not be as bad as first feared.

Looking ahead, the Australian Dollar could extend Monday’s gains following the release of CommBank’s flash PMI readings. If the preliminary index rises closer to the 50 no-change mark, it will buoy AUD.

Pound (GBP) Recovers from Three-Week Low

The Pound (GBP) edged higher on Monday, recovering from the three-week low hit during Asian trading. A weaker US Dollar, expectations of upbeat economic data and hopes the UK and EU would reach a trade deal buoyed Sterling.

However, gains were limited after Britain’s industrial output suffered its largest quarterly fall on record during the second quarter.

Looking ahead to this afternoon, the British currency could edge higher following the release of the UK’s PMI data. GBP will rise if data reveals growth in both the manufacturing and services sectors appears to be picking up.

Euro (EUR) Struggles as Eurozone Leaders Remain Divided

The Euro (EUR) was left largely flat but rose off two-and-a-half week lows against the US Dollar. The single currency struggled to make significant gains as EU leaders made no progress on the huge stimulus plan that has left the bloc divided for weeks. Although EUR losses were limited as leaders agreed urgent action would be needed to help the coronavirus-battered bloc.

However, the single currency could edge lower today following the release of a slew of PMI data. If the Eurozone’s PMI composite disappoints investors, it will send the Euro lower.

US Dollar (USD) Slides as Market Optimism Increases

The US Dollar (USD) slumped at the start of this week as risk appetite improved, and despite growing coronavirus cases around the globe, investors could not be deterred from flocking to riskier assets. Market optimism about a global economic recovery increased, dampening sentiment in the safe-haven Dollar.

Looking ahead, risk appetite could improve further following the release of June’s flash PMI data. Any signs in the flash data revealing the services and manufacturing sectors are close to returning to growth would add to optimism for a global recovery.

Canadian Dollar (CAD) Slumps as Oil Prices Fall

The Canadian Dollar (CAD) slumped at the start of this week’s session as oil prices slumped on Monday over concerns of a record increase in coronavirus cases could slow down the much-needed recovery in oil demand. This offset tighter supply cuts from major oil producers and send the ‘Loonie’ lower.

Looking ahead, sliding oil prices would cause the Canadian Dollar to suffer further losses during this week’s session.

New Zealand Dollar (NZD) Returns to Pre-Covid Strength

The New Zealand Dollar (NZD) rallied on Monday, allowing the risk-sensitive currency to return to its level of strength before the coronavirus hit earlier in the year. Looking ahead, the ‘Kiwi’ could continue yesterday’s rally if risk sentiment continues to improve.

Upcoming Data

23rd June 10:00                  AUD                       CommBank Composite PMI Flash (June)                30

23rd June 18:30                  EUR                        German Markit Services PMI Flash (June)              40

23rd June 18:30                  EUR                        German Markit Manufacturing PMI Flash (June) 42

23rd June 19:00                  EUR                        Markit Services PMI Flash (June)                                               41

23rd June 19:00                  EUR                        Markit Manufacturing PMI Flash (June)                  44

23rd June 19:30                  GBP                       Markit Services PMI Flash (June)                                               40

23rd June 19:30                  GBP                       Markit Manufacturing PMI Flash (June)                  46

24th June 12:45                  USD                       Markit Services PMI Flash (June)                                               44

24th June 12:45                  USD                       Markit Manufacturing PMI Flash (June)                  47

Louisa Heath

louisa.heath@torfx.com


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