Australian Dollar (AUD) Mixed on Renewed US-China Tensions
The Australian Dollar (AUD) was mixed at the end of the week, making gains against a weaker Pound but slumping against the Euro.
The ‘Aussie’ was left under pressure as renewed tensions between the US and China also weighed on sentiment. Reports revealed the Trump administration was considering a travel ban to the United States for all members of China’s Communist Party.
The ‘Aussie’ will continue to react to risk sentiment. If risk appetite amongst traders improves it will support the risk-sensitive Australian Dollar.
Pound (GBP) Prepares for Worst Week in a Month
The Pound (GBP) slumped on Friday as the currency prepared for its worst week in a month due to a dire economic outlook with signs of a prolonged economic recovery.
Prime Minister Boris Johnson also eased further lockdown measures at the end of the week but noted normal life would not return until November at the earliest. Johnson also announced that local authorities will have the power to shut down smaller areas of the country.
Looking ahead, Sterling is likely to start this week under pressure as traders continue to worry about the UK’s economic outlook.
Euro (EUR) Heads Towards Four-Month Highs
The Euro (EUR) headed towards four-month highs as traders were optimistic EU leaders would make progress on the bloc’s €750bn recovery fund.
The coronavirus recovery fund is expected to help lift the Eurozone out of a recession. However, many traders doubt the summit will reach an agreement and have noted EU leaders will need to meet again to reach a compromise.
Looking ahead, if the bloc can reach an agreement or reports suggest talks were successful and will soon secure an agreement, it will buoy the single currency and push it towards fresh highs.
US Dollar (USD) Struggles as Homebuilding Rises to Four-Year High
The US Dollar (USD) struggled at the end of the week, although it made gains against the Pound.
Data from the world’s largest economy showed US homebuilding rose by the most in nearly four years in June on rising demand for housing in suburbs and rural areas. However, with 32 million Americans collecting unemployment benefits and lumber prices reaching a two-year high, it is unlikely this is a sign of a robust housing market.
Demand for the US Dollar could continue to slide this week as the ‘Greenback’ stays sensitive to shifts in market sentiment.
Canadian Dollar (CAD) Subdued as Coronavirus Cases Weigh on Oil Demand
The Canadian Dollar (CAD) remained largely flat at the end of the week as surges in coronavirus cases slowed the recovery in fuel demand.
The increase in lockdowns in the US and other countries raised concerns that it may be years before fuel demand rebounds from the impact of the virus.
Looking ahead, the ‘Loonie’ could continue to struggle to make gains if oil prices continue to fall.
New Zealand Dollar (NZD) Flat as US-China Relations Deteriorate
The New Zealand Dollar (NZD) remained muted against a handful of its rivals at the end of the week as some traders highlighted the surge in coronavirus cases was threatening the US economy.
Deteriorating US-China relations also caused traders to move away from riskier assets such as the ‘Kiwi’. However, NZD was offered some support after June’s Business NZ PMI jumped to 56.3.
Looking ahead, if risk sentiment improves significantly and the Services NZ PSI rises, it will offer the New Zealand Dollar support.
Upcoming Data
20 July 08:30 NZD Services NZ PSI (June) 39
20 July 16:00 EUR German PPI (June) 0.5%