Australian Dollar (AUD) Struggles as Victoria Reports 21 Deaths
The Australian Dollar (AUD) struggled to make significant gains on Wednesday after Australia recorded its deadliest day of the coronavirus pandemic.
Victoria reported 21 deaths, two more than the previous deadliest day recorded earlier this week. 410 new cases of the virus were also reported which ended the three-day run of recorded cases being under 400, denting hopes the second wave of the virus was stabilising.
Today could see the ‘Aussie’ extend earlier losses as the latest unemployment rate is expected to rise in July.
Pound (GBP) Slides as Britain Suffers Worst GDP Slump of Any Major Economy
The Pound (GBP) slumped against a handful of currencies during yesterday’s session but held above $1.30 against the Dollar.
The latest growth data revealed Britain’s economy shrank by -20.4% in the second quarter. This was the largest contraction reported by any major economy so far, and the largest slump on record for Britain. However, June’s data offered a slight glimmer of hope as the economy began to recoup losses and grew by 8.7%.
Looking ahead, the Pound could continue to suffer losses as traders focus on this week’s dire economic data and ongoing Brexit negotiations.
Euro (EUR) Continues to Strengthen on Signs of V-Shaped Recovery
The Euro (EUR) strengthened on Wednesday, boosted by a weaker US Dollar while factory output added support.
Data revealed that Eurozone industrial production rose in June, rising by 9.1% after May’s 12.3% increase. While the pace of recovery only slowed slightly, it is still -11.6% below February’s levels. This suggests that while the start of the recovery is V-shaped, there is a long way to go.
The single currency could give up some of yesterday’s gains if today’s data disappoints markets. If France’s unemployment rate jumps higher than expected and German inflation weakens, it will weigh on EUR.
US Dollar (USD) Slides as Underlying Inflation Rises by Most in 29 Years
The US Dollar (USD) slumped during yesterday’s session after data showed US consumer prices jumped more than forecast in July.
Added to this, a measure of underlying inflation rose by the most in 29 and a half years. The report from the Labor Department noted that this is unlikely to mark the start of a concerning rise in inflation and the country’s central bank is likely to continue to pump money into the economy to help the United States recover from the coronavirus crisis.
Looking ahead, the ‘Greenback’ could slump further if risk appetite is boosted by the latest initial US jobless claims.
Canadian Dollar (CAD) Buoyed as US Crude Inventories Fall
The Canadian Dollar (CAD) made some gains during yesterday’s session after oil prices jumped.
Prices were buoyed after a report revealed US crude inventories fell more than expected last week. The oil-sensitive ‘Loonie’ made gains as this boosted hopes fuel demand in the world’s largest economy will be able to weather the coronavirus crisis.
Looking ahead, CAD will continue to make gains if oil prices continue to rise during today’s session.
New Zealand Dollar (NZD) Falls as RBNZ Warns of Negative Interest Rates
The New Zealand Dollar (NZD) struggled on Wednesday after the Reserve Bank of New Zealand surprised markets by expanding its bond-buying programme.
However, the ‘Kiwi’ remained under pressure after the country’s central bank warned interest rates would have to go below zero to revive the struggling economy if New Zealand went back into lockdown.
Looking ahead, if today’s food inflation disappoints investors it will send NZD lower.
Upcoming Data
08:45 NZD Food Inflation (Jul)
11:30 AUD Unemployment Rate (Jul) 7.7%
15:30 EUR France Unemployment Rate (Q2) 8.5%
16:00 EUR German Inflation Rate (Jul) -0.1%
22:30 USD Initial Jobless Claims (8/Aug) 1150K