Australian Dollar Slides After Record Slump in Inflation

Australian Dollar (AUD) Suffers as Aussie CPI Tumbles

The Australian Dollar (AUD) made gains against some riskier assets but struggled to make significant gains after data showed consumer prices tumbled by the most on record last quarter.

Australia’s Consumer Price Index (CPI) plummeted -1.9% in Q2 and sent annual prices -0.3% lower, the first negative reading since 1998. This was a huge blow to the Reserve Bank of Australia as the country had only just managed to get inflation back into the 2-3% target range.

Looking ahead, the ‘Aussie’ could struggle during today’s session if the latest building permits data disappoints traders.

Pound (GBP) Rises as BoE Mortgage Approvals Quadruple

The Pound (GBP) made gains against a handful of currencies including the US Dollar after data from the Bank of England (BoE) showed mortgage approvals bounced back in June.

Mortgage approvals rebounded, and more than quadrupled in June after May’s record low as households showed signs they were spending more as coronavirus lockdown restrictions eased.

Today is the release of the latest Nationwide Housing Prices data which is expected to tumble in July. While this may weigh slightly on the Pound, it is likely Sterling’s movement will be driven by US Dollar weakness and reaction to the Federal Reserve policy decision meeting.

Euro (EUR) Slides as French Consumers Grow Wary

The Euro (EUR) struggled to make significant gains in yesterday’s session, although it rose against the US Dollar on Wednesday afternoon.

The single currency edged lower against a handful of its rivals yesterday after data revealed that French consumer confidence slumped unexpectedly in July. Signs of a rebound in coronavirus cases and fears about unemployment remaining high left French consumers feeling the need to save money.

Looking ahead, the single currency could suffer further losses following the release of Germany’s unemployment rate which is expected to increase in June. Also, GDP data from the bloc’s largest economy will likely weigh on Euro exchange rates as forecast is a -11.3% contraction year-on-year.

US Dollar (USD) Slides Ahead of Fed Meeting

The US Dollar (USD) slumped during Wednesday’s session as traders awaited the latest interest rate decision and rate statement from the US Federal Reserve.

However, risk appetite was offered some support as the country’s trade deficit fell after exports rebounded following several months of declines which largely suggests there will be a recovery in global trade. USD remained under pressure though, as the upbeat data did not change GDP forecasts for the US economy to suffer its worst contraction since the Great Depression.

Looking ahead, the US Dollar could continue struggling following the release of dire US GDP and the latest round of initial jobless claims.

Canadian Dollar (CAD) Struggles to Make Gains as Coronavirus Cases Surge

The Canadian Dollar (CAD) struggled to make gains against a handful of currencies, although was able to make some gains against the US Dollar.

The ‘Loonie’ struggled despite oil prices rising after a surprise fall in US crude inventories, although gains were limited by worries about record increases in coronavirus infections in some US states.

Today could see the Canadian Dollar claw back some losses if May’s average weekly earnings rise more than expected.

New Zealand Dollar (NZD) Slips on Market Sentiment

The New Zealand Dollar (NZD) struggled to make gains during Wednesday’s session as traders nervously awaited the US Federal Reserve’s interest rate decision and rate statement.

However, the ‘Kiwi’ may make gains today if June’s building permits rise higher than expected and ANZ’s business confidence continues to improve in July.

Upcoming Data

08:45 NZD Building Permits (June) 3%

11:00 NZD ANZ Business Confidence (July) -31

11:30 AUD Building Permits (June) 2.5%

16:00 EUR German Unemployment Rate Harmonised (June) 4.2%

16:00 GBP Nationwide Housing Prices (July) -0.8%

17:55 EUR German Unemployment Rate (July) 6.6%

18:00 EUR German Flash GDP (Q2) -9.2%

22:30 CAD Average Weekly Earnings (May)

22:30 USD GDP Growth Rate Advanced (Q2) -33%

22:30 USD Initial Jobless Claims 1400K

Louisa Heath

louisa.heath@torfx.com


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