Australian Dollar (AUD) Struggles on Record Unemployment
The Australian Dollar (AUD) made gains against the US Dollar but struggled against the Pound and Euro despite the country’s jobless rate coming in lower than forecast.
While the unemployment rate rose to just 7.5% in July from 7.4%, this was not enough to offer support as the number of Australians looking for work hit a 22-year high. Added to this, the continuing wave of coronavirus in Victoria marked an unwelcome setback and weighed on sentiment.
Traders will be closely watching today’s speech from Reserve Bank of Australia (RBA) Governor Philip Lowe, where dovish comments could drive the ‘Aussie’ lower at the end of this week’s session.
Pound (GBP) Traders Worry About Britain’s Long-Term Economic Outlook
The Pound (GBP) rose against a weaker US Dollar and riskier assets but remained flat against the Euro as traders remain cautious about the long-term outlook for Britain. Traders continue worrying about the looming Brexit deadline and end of the government’s furlough scheme.
Sterling appeared to recover from yesterday’s data which revealed Britain’s economy suffered a record contraction in Q2, with the country’s economy shrinking by -20.4%, which is substantially more than the EU and US.
Looking ahead, further US Dollar weakness could continue to boost the Pound, although worries about Brexit and the end of the government’s furlough scheme could limit gains.
Euro (EUR) Boosted as Washington Maintains Trade Tariffs
The Euro (EUR) made significant gains during yesterday’s session. The single currency was offered support as Washington decided not to exacerbate the 16-year old trade dispute with the bloc over aircraft subsidies by dishing out further tariffs.
The US said it would maintain 15% tariffs on Airbus and aircraft as well as the 25% tariffs slapped onto other goods from across the EU. Meanwhile, the currency gained further support after the European Commission said it wanted to negotiate with the US to end the row.
Today could see the Euro suffer losses if the second Eurozone GDP estimate shows growth contracted more than expected, and the bloc’s unemployment change disappoints traders.
US Dollar (USD) Index Tumbles to Lowest Level in a Week
The US Dollar (USD) struggled on Thursday, with the US Dollar index slumping to its lowest level in a week as traders focus on the stalemate in negotiations over further stimulus from the federal government.
The latest data from the labour market showed the number of Americans filing for unemployment benefits fell below one million for the first time since the start of the coronavirus crisis. However, the expiration of the enhanced unemployment benefits may have discouraged many from filing claims.
Meanwhile, today’s US retail sales could send the US Dollar lower if sales do not rise as high as forecast due to the resurgence of coronavirus cases.
Canadian Dollar (CAD) Gains as Oil Prices Hold Steady
The Canadian Dollar (CAD) was able to make gains against a weaker US Dollar but struggled against the Pound.
Oil prices held steady during yesterday’s session as the International Energy Agency lowered its demand forecasts. Its forecasts showed that reduced air travel would likely lower global oil consumption by 8.1 million barrels a day which weighed on the oil-sensitive ‘Loonie’.
Looking ahead, CAD could receive some support following the release of the latest Canadian manufacturing sales data which is expected to jump in June.
New Zealand Dollar (NZD) Trades Lower as Attention Turns to US-China Deal
The New Zealand Dollar (NZD) slumped against a handful of currencies today as risk appetite dipped once again.
Traders remained cautious as attention turned back to US-China relations ahead of this weekend’s video conference in which leaders are due to review the current Phase 1 trade deal.
Looking ahead, the ‘Kiwi’ could claw back some losses following the release of an upbeat Business NZ PMI which is expected to rise in July.
Upcoming Data
08:30 NZD Business NZ PMI (Jul) 57
09:30 AUD RBA Gov Lowe Speech
19:00 EUR GDP Growth Rate 2nd Estimate (Q2) -12.1%
19:00 EUR Employment Change (Q2) -2%
22:30 CAD Manufacturing Sales (Jun) 14.5%
22:30 USD Retail Sales (Jul) 2%