Australian Dollar Retreats from 15-Month Peak

Australian Dollar (AUD) Slides on US-China Tensions

The Australian Dollar (AUD) slumped during Thursday’s session as market sentiment turned cautious again.

The ‘Aussie’ struggled following allegations of spying between the US and China, with Washington giving Beijing a deadline of Friday to close its consulate in Texas. Relations appeared to deteriorate further, which caused the risk-sensitive Australian Dollar to retreat from a 15-month peak against the US Dollar.

However, AUD could make significant gains this morning following the release of the latest CommBank manufacturing and services PMI data, which are forecast to show further growth.

Pound (GBP) Tumbles on Barnier’s Comments

The Pound (GBP) slumped on Thursday after the European Union’s chief Brexit negotiator, Michel Barnier, said Britain had not shown any willingness to tackle the deadlock in trade talks.

Following the latest round of talks, Barnier noted there has not been any progress on the issue of ensuring fairness on state aid, which drove GBP lower.

Looking ahead, Sterling may be able to claw back some losses if today’s flash manufacturing and services PMI surveys show a higher-than-expected return to growth in July.

Euro (EUR) Makes Gains as German Confidence Improves

The Euro (EUR) continued making gains against a handful of currencies during yesterday’s session as German consumer confidence rose, buoyed by a temporary VAT cut.

This was the third consecutive month sentiment had improved and GfK’s researcher said that the improvement in this measure resembled a V-shaped recovery, which offered EUR some support.

The single currency could make further gains if today’s flash PMI surveys from across the Eurozone impress investors and show growth has returned to both the manufacturing and services sectors.

US Dollar (USD) Falls to a Four-Month Low

The US Dollar (USD) tumbled to a four-month low against many of its rivals as investors adopted a wait and see approach amid rising US-China tensions.

However, risk appetite was dealt a blow during the session as initial jobless claims rose over the course of last week for the first time since March. This was the clearest signal yet of a pause in the recovery from the coronavirus crisis for the world’s largest economy.

The latest US flash PMI surveys for services and manufacturing released today are forecast to show growth returned to both sectors. Risk appetite could be boosted if investors consider the surveys strong enough to offset geopolitical tensions and rising US coronavirus cases.

Canadian Dollar (CAD) Edges Higher despite Weak Oil Prices

The Canadian Dollar (CAD) was able to make some gains on Thursday despite oil prices falling as a weaker US Dollar was offset by rising US oil inventories and huge increases in coronavirus cases in the US.

Cases in the world’s largest oil consumer approached four million, which increased uncertainty over a recovery in oil demand.

Looking ahead, the oil-sensitive ‘Loonie’ could edge lower if oil prices continue to slide at the end of this week’s session.

New Zealand Dollar (NZD) Flat as Beijing Vows to Retaliate

The New Zealand Dollar (NZD) remained largely flat during yesterday’s session, although still held near its earlier six-month high.

However, NZD gave up some of these gains as investors became cautious about deteriorating US-China relations while Beijing vowed to respond to Washington’s latest move. The ‘Kiwi’ will continue to react to market sentiment, and if risk appetite slumps further, NZD will follow.

Upcoming Data

24 July 09:00                      AUD                       CommBank Flash Manufacturing PMI (July)          54

24 July 09:00                      AUD                       CommBank Flash Services PMI (July)                       53.5

24 July 09:01                       GBP                       GfK Consumer Confidence (July)                                -26

24 July 18:00                       EUR                        Markit Flash Manufacturing PMI                               49.8

24 July 18:00                       EUR                        Markit Flash Services PMI                                             50.8

24 July 18:30                       GBP                        Markit Flash Manufacturing PMI                               51.5

24 July 18:30                       GBP                        Markit Flash Services PMI                                             50.5

24 July 23:45                       USD                        Markit Flash Manufacturing PMI                               51.5

24 July 23:45                       USD                        Markit Flash Services PMI                                             50.4

Louisa Heath

louisa.heath@torfx.com


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