Upbeat Manufacturing Surveys Buoy Risk Appetite and Australian Dollar

Australian Dollar (AUD) Edges Higher on Upbeat Manufacturing PMI

The Australian Dollar (AUD) made gains against a handful of currencies on Wednesday, although it was left flat against the Pound and New Zealand Dollar.

Markit revealed Australia’s manufacturing sector returned to growth in June as the coronavirus lockdown restrictions were eased. This allowed the country’s manufacturing PMI to rise from May’s 44 to 51.2 in June. However, increased geopolitical tensions and a rise in coronavirus cases limited gains.

The ‘Aussie’ could edge higher today following the release of the country’s trade balance. If both imports and exports rise higher than expected, AUD will receive an upswing of support.

Pound (GBP) Steadies as Business Sentiment Jumps to 21-Month High

The Pound (GBP) steadied on Wednesday after upbeat manufacturing data revealed the sector returned to growth after the coronavirus pandemic caused a historic collapse in activity. The manufacturing PMI returned to growth for the first time since February and business sentiment jumped to a 21-month high.

Looking ahead, Sterling could give up some of its recent gains following the release of the Bank of England’s (BoE) Financial Stability Report, if it shows a bleak outlook for the UK economy.

Euro (EUR) Under Pressure as German PMI Remains in Contraction Territory

The Euro (EUR) was under pressure on Wednesday as risk appetite improved thanks to improved European data. Data from the bloc’s largest economy showed Germany’s manufacturing sector contracted at a slower pace as coronavirus restrictions were eased, although the sector remained in contraction territory.

Disappointing Eurozone unemployment data could send the single currency lower today if May’s rate rises higher than expected.

US Dollar (USD) Falls as Risk Sentiment Improves on PMI Data

The US Dollar (USD) suffered losses on Wednesday as upbeat data from Europe boosted risk appetite and sparked hopes for a global economic recovery despite growing coronavirus cases in the US.

Risk appetite was also boosted after Markit revealed the US manufacturing PMI saw a record rise as new orders stabilised, and job losses eased as optimism rose.

Looking ahead, the US Dollar could suffer some losses following the release of June’s non farm payrolls data. If payrolls data reveals more jobs were added to the economy than expected, risk appetite will increase, and send traders flocking towards riskier assets.

Canadian Dollar (CAD) Boosted by Strong Data

The Canadian Dollar (CAD) sustained gains on Wednesday, with rising oil prices, upbeat manufacturing data and a fall in US crude inventories signs of an economic recovery, which boosted prices.

However, growing fears over the recent surge in coronavirus cases capped gains. Looking ahead, the ‘Loonie’ could slide if today’s trade balance data and tomorrow’s manufacturing PMI disappoints investors.

New Zealand Dollar (NZD) Rises as Traders Flock to Riskier Assets

The New Zealand Dollar (NZD) edged higher against a handful of currencies as risk appetite improved thanks to upbeat manufacturing PMIs. Looking ahead, if risk appetite continues to improve, the ‘Kiwi’ could continue to benefit.


Upcoming Data

July 2nd 12:30                      AUD                       Balance of Trade (May)                                 A$9.1B

July 2nd 20:00                      EUR                        Unemployment Rate (May)                         7.7%

July 2nd 20:00                      EUR                        PPI (May)                                                            -5.2%

July 2nd 23:30                      CAD                       Balance of Trade (May)                                 C$-2.8B

July 2nd 23:30                      USD                       Non Farm Payrolls (June)                              2900K

July 2nd 23:30                      USD                       Unemployment Rate (June)                        12.3%

July 2nd 23:30                      USD                       Initial Jobless Claims (27 June)                   1340K

July 3rd 00:30                      CAD                       Markit Manufacturing PMI (June)             41

July 3rd 03:00                      GBP                       BoE Financial Stability Report

Louisa Heath