Australian Dollar (AUD) Struggles Against Weak Business Confidence
The Australian Dollar (AUD) was left largely flat on Tuesday after data revealed that National Australia Bank’s business confidence survey tumbled in July. The confidence index fell back to -14 after rising to 0 in June, weighing on the ‘Aussie’ despite an improvement in market sentiment.
Meanwhile, a separate measure showed business conditions improved in July thanks to a rebound in the Aussie service sector. However, the second wave of coronavirus in Victoria badly hit confidence as the state went into lockdown.
‘Aussie’ losses could continue during today’s session if the latest Westpac Consumer Confidence Index plummets further than expected in August due to the second wave of the coronavirus crisis.
Pound (GBP) Supported by BoE Deputy Governor Comments
The Pound made some slight gains against the US Dollar and headed towards five-month peaks despite gloomy employment data. The UK suffered its largest fall in employment since the height of the financial crisis in 2009.
However, GBP was largely flat but found some support in improved market sentiment and comments from the Bank of England (BoE). The Deputy Governor, Dave Ramsden said the BoE will step up quantitative easing if the economy struggles again.
Looking ahead, Sterling will likely suffer losses during today’s session as the latest GDP data is forecast to show Britain’s economy contracted by 20% in the second quarter.
Euro (EUR) Boosted by Latest German ZEW Survey
The Euro (EUR) made gains against the US Dollar but struggled to make significant gains against other major currencies.
The single currency received support after German investor sentiment improved more than expected in August. ZEW’s survey of economic sentiment jumped from 59.3 in July to 71.5. EUR also benefited from USD weakness as markets believe the bloc is handling the coronavirus crisis better than the United States.
The Euro could edge higher today if the latest Eurozone industrial production data shows activity has rebounded in June.
US Dollar (USD) Heads Towards Two-Year Lows
The US Dollar (USD) struggled during Tuesday’s session and the Dollar index slipped almost 0.5% and headed towards two-year lows.
Markets moved away from the ‘Greenback’ as risk appetite increased. Added to this, experts have warned US President Donald Trump’s Covid-19 executive orders are likely too late to help support the US economy.
Meanwhile, USD could continue to struggle if the latest inflation data disappoints markets and increases worries the US economy will underperform.
Canadian Dollar (CAD) Boosted by Oil Prices
The Canadian Dollar (CAD) was able to make some gains during yesterday’s session as crude oil prices rose on expectations for a round of US economic stimulus to support the world’s largest oil consumer.
Added to this, signs of demand in Asia also buoyed prices and supported the oil-sensitive ‘Loonie’. Looking ahead, if oil prices continue to rise it will offer the Canadian Dollar further support this week.
New Zealand Dollar (NZD) Struggles Ahead of RBNZ Meeting
The New Zealand Dollar (NZD) suffered losses on Tuesday as traders focused on the deadlock on US fiscal stimulus and the upcoming central bank meeting.
Added to this, after 102 days without community transmission of Covid-19, New Zealand reported new cases on Tuesday which weighed on NZD.
Looking ahead, ‘Kiwi’ traders will be focused on the upcoming Reserve Bank of New Zealand (RBNZ) monetary policy meeting and subsequent press conference.
Upcoming Data:
10:30 AUD Westpac Consumer Confidence Index (Aug) 87
12:00 NZD RBNZ Interest Rate Decision 0.25%
13:00 NZD RBNZ Press Conference
16:00 GBP Flash GDP Growth Rate (Q2) -20.4%
19:00 EUR Industrial Production (Jun) 10%
22:30 USD Core Inflation (Jul) 1%
22:30 USD Inflation Rate (Jul) 0.7%