Australian Dollar (AUD) Fluctuates on PMI Data
The Australian Dollar (AUD) initially firmed against several peers on Friday as the country’s PMI data revealed an unexpected increase in both manufacturing and service-sector activity.
However, this upside didn’t last for long, with AUD exchange rates quickly weakening as market risk appetite soured.
A lack of data today leaves the ‘Aussie’ to trade on external factors: if conflict in Ukraine persists, AUD could fall on risk-off headwinds.
New Zealand Dollar (NZD) Subdued by Risk-Off Trading
The New Zealand Dollar (NZD) weakened on Friday, despite a brief recovery following disappointing inflation data earlier in the week.
While markets were reassured that the Reserve Bank of New Zealand (RBNZ) would not be deterred from its rate hike trajectory by Q1 CPI data, ‘Kiwi’ trading was instead dampened by a risk-off mood given events in Ukraine.
Russia’s war may further affect NZD exchange rates today: if Putin’s forces continue to deny humanitarian access to Mariupol, risk aversion could continue to dent ‘Kiwi’ prospects.
Pound (GBP) Dives on Weak Retail Sales
The Pound (GBP) succumbed to heavy selling pressure at the end of last week, as retail sales fell by 1.4% in March – much worse than market forecasts of a 0.3% decline.
Alongside dwindling public morale, economists worry that falling retail sales could affect monetary policy, exerting pressure upon the Bank of England (BoE) to adopt a more cautious approach.
Today, CBI data could put further pressure on Sterling exchange rates, as industrial trends are predicted to fall and business optimism to plummet to -23.
Euro (EUR) Enjoys PMI-Inspire Tailwinds
The Euro (EUR) climbed against the majority of its peers on Friday, as PMI data from both Germany and the wider Euro area impressed overall.
Manufacturing activity fell below expectations in Germany, but otherwise all data exceeded forecasts. Chris Williamson, Chief Business Economist at S&P Global, said the results were ‘stronger than anticipated’ and could lead to a more hawkish tilt from the European Central Bank (ECB).
Germany’s Ifo business climate may influence EUR today – if the business climate indicator falls as expected, the single currency might tumble.
US Dollar (USD) Inches Higher on Fed Comments
The US Dollar (USD) firmed at the end of last week, following hawkish comments from Federal Reserve Chairman Jerome Powell.
Powell endorsed a 0.5% interest rate hike for May’s meeting of the Federal Open Market Committee, saying ‘fifty basis points will be on the table’ and hinting that further aggressive rate hikes may be coming. This turn caused US bond yields to edge higher.
Today, the Chicago Fed national activity index is forecast to weaken to 0.40, potentially subduing USD. On the other hand, the Dallas Fed manufacturing index looks to increase to 12 in April, which may counteract downside in the ‘Greenback’.
Canadian Dollar (CAD) Trades Mixed Following Retail Data
The Canadian Dollar (CAD) traded in a mixed range on Friday as crude oil prices fell, but Canadian retail data impressed. Sales increased by 0.1% in February, rather than falling as expected.
Data Releases
Apr 25th 18:00 EUR German Ifo Business Climate (Apr) 89.1
Apr 25th 20:00 GBP CBI Industrial Trends Orders (Apr) 21
Apr 25th 20:00 GBP CBI Business Optimism Index (Q2) -23
Apr 25th 22:30 USD Chicago Fed National Activity Index (Mar) 0.40
Apr 26th 00:30 USD Dallas Fed Manufacturing Index (Apr) 12