Australian Dollar Steady Despite Disappointing PMI Figures

Australian Dollar Shakes off PMI Disappointment

A set of underwhelming flash PMI figures from Australia failed to dampen AUD exchange rates on Friday despite the country dealing with an ongoing coronavirus outbreak.

Despite preliminary Australian PMI’s pointing to a sharp downturn in economic growth during July, the ‘Aussie’ was able to hold onto most of its gains from earlier in the week.

A quieter start to this week could see AUD exchange rates driven by the global market mood today, with further concerns over the surge in global coronavirus cases looking to drag down AUD sentiment.

Pound Falters on Lacklustre Economic Data

The Pound (GBP) struggled against many of the majors before the weekend as both retail sales figures alongside flash PMI’s from the UK failed to impress investors.

Whilst retail sales rebounded 0.5% during June in the UK, experts were pessimistic on the outlook for consumer spending. Lisa Hooker, consumer markets leader at the consultancy PwC commented on the data, saying: ‘The post-pandemic retail recovery will likely remain fragile for the rest of the summer, as government support schemes begin to wind down.’

In absence of any data, the Pound looks to be driven by any further domestic coronavirus developments at the start of this week.

Euro Mixed on Positive PMI Figures

The Euro (EUR) traded in a mixed range throughout Friday’s session as flash PMI figures from the Eurozone reported that business activity in the Eurozone expanded at the fastest pace since 2000.

Bert Colijn, senior Eurozone economist at ING, commented on the figures, saying: ‘Better than expected PMIs confirm the strong rebound expected for the third quarter, as reopening services make up for the slight decline in manufacturing output due to supply chain problems.’

This evening will see the release of the most recent Ifo business climate index from Germany, which is forecast to have risen in July, potentially providing fresh support to the single currency.

US Dollar Buoyed by Dip in Risk Appetite

The US Dollar (USD) ticked higher at the end of last week’s session, with the appeal of the safe-haven currency being buoyed by ongoing coronavirus concerns and rising US Treasury yields.

However, these gains were trimmed somewhat by the latest US PMI’s from IHS Markit, which reported a surprisingly steep slowing of growth in the US service sector this month.

Expect to see the US Dollar continue to be driven by market sentiment at the start of this week as, traders brace for the latest Federal Reserve interest rate decision later in the session.

Retail Sales Data Limit Canadian Dollar Appeal

Heading into the weekend the Canadian Dollar (CAD) stumbled against disappointing retail sales figures from Canada, which contracted again in May, albeit at a slightly slower pace than expected.

New Zealand Dollar

The New Zealand Dollar (NZD) clung to gains made earlier in the week on Friday as a fluctuating market mood capped any meaningful gains for the ‘Kiwi.’

Data Releases

26th 18:00 EUR DE Ifo Business Climate 102.1
26th 21:00 GBP BoE Vlieghe Speech

Mathew Andrews