Australian Dollar (AUD) Knocked as China Mulls Coal Price Controls
The Australian Dollar (AUD) weakened through the first part of yesterday, with reports indicating that China may place price controls on coal and a weaker-than-expected domestic consumer confidence index weighing on AUD exchange rates.
However, the ‘Aussie’ was able to claw back a good portion of these losses through the European session as a weaker US Dollar (USD) helped to buoy market risk appetite.
In the absence of any notable AUD data releases todays, its likely we will see movement in the Australian Dollar remain tied to market sentiment.
Pound (GBP) Fluctuates in Wake of Hawkish BoE Remarks
The Pound (GBP) initially strengthened during Wednesday’s trading session, on the back of comments from Bank of England (BoE) Chief Economist Andy Haldane, in which he suggested the bank may soon need to start tapering its stimulus.
But these gains didn’t last for long, with Sterling coming under fresh pressure after UK-EU talks to resolve the dispute over the Northern Ireland protocol ended without agreement.
Looking ahead, lingering Brexit concerns, on top of ongoing fears that the UK’s 21 June reopening date could be delayed, are likely to leave the Pound at risk of further losses through the latter half of this week.
Euro (EUR) Firms as USD Exchange Rates Weaken
The Euro (EUR) rallied through yesterday’s trading session, with the single currency being propelled higher by its negative correlation with the US Dollar (USD).
Also supportive of EUR exchange rates was Germany’s latest trade figures, as the country posted a larger-than-expected trade surplus in April.
In the spotlight today we have the European Central Bank’s (ECB) latest rate decision.
No policy changes are expected from the ECB this month, but the conclusion from the bank’s monetary policy strategy review could infusing some volatility in the Euro.
US Dollar (USD) Weakened by Falling Treasury Yields
The US Dollar (USD) was placed on the defensive on Wednesday, with a softening of US Treasury yields applying some bearing pressure to the ‘Greenback’.
This dip in the US Dollar also came as USD investors were reluctant to make any aggressive bets ahead of today’s US consumer price index.
Economists are predicting another sharp rise in domestic inflation in May. This could drive the US Dollar higher if traders believe it will force the Federal Reserve to reconsider its current dovish stance, and begin tightening its monetary policy.
Canadian Dollar (CAD) Rallies as WTI Oil Climbs to $70
The Canadian Dollar (CAD) ticked higher yesterday, with the commodity-linked currency receiving support as WTI crude oil climbed above $70 a barrel to a near-three-year high.
Offering additional support to the ‘Loonie’ was the Bank of Canada (BoC), which left interest rates on hold as expected following its latest policy meeting but was optimistic in its outlook for Canada’s economic recovery.
New Zealand Dollar (NZD) Undermined by Fall in Business Morale
The New Zealand Dollar (NZD) weakened on Wednesday, in response to an unexpected fall in domestic business confidence in June.
Jun 10th 21:45 EUR ECB Rate Decision 0.0%
Jun 10th 22:30 USD Inflation Rate (May) 4.7%