Australian Dollar (AUD) Dented by Weaker Consumer Confidence
The Australian Dollar (AUD) tumbled against its peers yesterday as the Westpac consumer confidence declined in April.
Morale dipped from 96.6 to 95.7 – down for the fifth month running – amid rising inflation, the risk of higher interest rates and widespread flooding. Further sapping AUD support was a reduced trade surplus in China, Australia’s largest trading partner, as Chinese imports dropped.
Australian jobs data is likely to influence trading today – the country’s unemployment rate is expected to have fallen slightly in March, while employment looks to have increased by 40K. If the data prints as expected, the ‘Aussie’ could climb.
New Zealand Dollar (NZD) Plummets on RBNZ Forward Guidance
The New Zealand (NZD) tumbled in midweek trade as the Reserve Bank of New Zealand (RBNZ) warned of out-of-control inflation.
The central bank hiked interest rates by 50bps for the first time in 22 years, calling the move a ‘path of least regret’ as policymakers worried of inflation becoming entrenched; the RBNZ has now raised the cash rate for four straight policy meetings, lifting it by 125 basis points since October.
Looking ahead, the ‘Kiwi’ may be influenced by Australian figures today, given a lack of domestic data. If AUD firms, the New Zealand Dollar may enjoy tailwinds.
Pound (GBP) Tumbles on High UK Inflation
The Pound (GBP) faced headwinds on Wednesday as the UK’s latest CPI exceeded expectations at 7%.
Rather than buoying Sterling, the release dented GBP prospects as cost-of-living pressures came into focus; economists at Panmure Gordon warned that inflation could peak at 10% later this year, threatening to push more families into poverty.
A lack of data leaves the Pound to trade on external factors today – if further proof of Russian brutality in Ukraine is unveiled, GBP may sink on risk-off trading sentiment.
Euro (EUR) Supported by USD Weakness
The Euro (EUR) found some support against its peers yesterday, as intermittent weakness in the US Dollar (USD) lent upside.
Further strengthening the single currency was speculation that the European Central Bank (ECB) could raise interest rates before the end of the year; traders and banks have ramped up rate hike bets following the latest minutes from the ECB.
Today’s ECB decision is likely to influence EUR exchange rates – if policymakers strike a hawkish tone, markets may adopt more bullish hopes of future policy tightening.
US Dollar (USD) Wavers on Fears of Recession
The US Dollar (USD) succumbed to downside midweek as high inflation data led to forecasts of recession.
Bank of America strategist Michael Hartnett wrote in a note to clients last Friday that ‘Inflation is out of control; inflation causes recessions.’ In yesterday’s session, America’s Producer Price Index jumped to 11.2% – above the 10.6% expected – further stoking economists’ worries.
US Retail data could affect the ‘Greenback’ today; sales in March look to have grown by 0.6%, lending potential USD upside.
Canadian Dollar (CAD) Sinks Following BoC Rate Hike
The Canadian Dollar (CAD) slipped on Wednesday despite the Bank of Canada (BoC) also raising interest rates by 0.5%.
Data Releases
Apr 13th 11:30 AUD Unemployment Rate (Mar) 3.9%
Apr 13th 11:30 AUD Employment Change (Mar) 40K
Apr 13th 21:45 EUR ECB Interest Rate Decision 0%
Apr 13th 22:30 USD Retail Sales (Mar) 0.6%
Apr 13th 22:30 USD Initial Jobless Claims (09/Apr) 171K
Apr 14th 00:00 USD Michigan Consumer Sentiment Prel (Apr) 59
Apr 14th 04:30 USD Fed Mester Speech N/A