Australian Dollar (AUD) Slides as Attention Turns Back to the US
The Australian Dollar (AUD) struggled on Tuesday as attention turned to the upcoming US Federal Reserve monetary policy meeting as the bounce back in the US Dollar (USD) weighed on the ‘Aussie’.
While no policy change is expected during the Fed’s meeting on Wednesday, investors expect officials will reiterate their super-easy guidance. However, the unpredictability of this and the looming deadline for US Congress to extend unemployment benefits weighed on risk appetite.
Looking ahead, AUD traders will focus on the release of the latest inflation data. If consumer prices plummet further than expected in the second quarter, the ‘Aussie’ will slide.
Pound (GBP) Rises as Retail Sales Jump to Highest Level in Over a Year
The Pound (GBP) made gains during yesterday’s session as the currency continued to benefit from upbeat comments from the EU’s chief negotiator, Michel Barnier.
GBP was also offered support after a gauge of retail sales from the Confederation of British Industry jumped to its highest level in over a year. The data showed sales jumped as Britain’s economy reopened after a coronavirus lockdown.
Looking ahead, traders will continue to focus on Brexit and be on the lookout for upbeat headlines suggesting talks are progressing well and both sides continue to be optimistic.
Euro (EUR) Tumbles from Two-Year Highs
The Euro (EUR) slumped on Tuesday and retreated from earlier two-year highs against the US Dollar.
Data revealed that Spain shed a record one million jobs in the second quarter of 2020 as the country saw one of Europe’s strictest coronavirus lockdowns. Spain’s unemployment rate jumped to a two-year high of 15.33%, which weighed on single currency sentiment.
Looking ahead, the Euro could slide further following the release of France’s consumer confidence data. If confidence slides in July after improving in June, it will weigh on the single currency.
US Dollar (USD) Bounces Back from Two-Year Low
The US Dollar (USD) was able to bounce off a two-year low on Tuesday as selling pressure for the currency decreased ahead of the latest US Federal Reserve meeting.
The Dollar index rose, although remained down by -3.6% in July and will need a much stronger bounce back to avoid July being the worst month in close to a decade for the ‘Greenback’.
Traders will continue to focus on the upcoming Fed meeting as well as Friday’s deadline for Congress to extend its unemployment benefits, which could see traders move away from USD due to unpredictability.
Canadian Dollar (CAD) Falls on Oil Demand Worries
The Canadian Dollar (CAD) slumped further on Tuesday despite oil prices holding steady during the day’s session as markets hoped for additional US fiscal stimulus.
However, this was offset by oil demand worries as coronavirus cases continued to rise around the world. Added to this, the fiscal package which could support oil prices was stuck in deadlock.
Looking ahead, the ‘Loonie’ will suffer if oil prices slump as the US Republicans and Democrats remain in deadlock over fiscal stimulus.
New Zealand Dollar (NZD) Slumps After Reaching Eight-Month Top
The New Zealand Dollar (NZD) was able to rally to an eight-month top against the US Dollar before retreating once again and slumping later in the day. The bounce back in USD and growing geopolitical tensions weighed on the ‘Kiwi’.
Meanwhile, NZD could continue to slide if traders continue to sell off riskier assets.