Australian Dollar (AUD) Firms as Inflation Exceeds Expectations
The Australian Dollar (AUD) climbed against several of its peers midweek, as Australia’s annualised CPI printed above expectations at 5.1%.
According to the Australian Bureau of Statistics, prices were driven up by transport, food and housing costs, amongst other factors. Markets are now shifting their expectations to a 15-bps rate rise at the Reserve Bank of Australia (RBA)’s interest rate decision on 3 May.
Today, markets will be looking ahead to Thursday’s PPI release. The data is expected to tally with rising consumer inflation, potentially buoying AUD on reinforced rate hike hopes.
New Zealand Dollar (NZD) Wavers Ahead of Trade Balance
Trade in the New Zealand Dollar (NZD) was mixed on Wednesday in advance of New Zealand’s trade balance release. The country is expected to report a surplus of NZ$329m.
If today’s data reveals the surplus expected, NZD may climb – a commodity-linked currency, positive export dynamics bode well for the New Zealand Dollar.
Pound (GBP) Dented by Lack of Data
While the Pound (GBP) strengthened against several peers yesterday, it fell against others as a lack of domestic data exposed Sterling to losses.
The Bank of England (BoE) may take steps next week towards selling some of its £875bn of government bonds; yet economists have accused the central bank of taking a ‘timid’ approach compared with the more hawkish Federal Reserve.
Today’s speech from the BoE’s Governor Andrew Bailey may alter market’s interpretation if Bailey strikes a hawkish tone. If the Governor is dovish, however, GBP is likely to tumble.
Euro (EUR) Sentiment Dampens on Poor German Data
The Euro (EUR) sank midweek on a weaker-than-expected Germany consumer confidence index, which reported a record fall in consumer morale.
Further undermining the EUR exchange rates was Russia threat to halt gas supplies to other EU countries after ceasing to supply Poland and Bulgaria.
Today, German inflation could support the Euro if it remains above 7% as anticipated, encouraging a hawkish response from the European Central Bank (ECB).
US Dollar (USD) Boosted by Cautious Market Mood
The US Dollar (USD) found strength on Wednesday as a risk-off market mood attracted support to safe-haven currencies.
Also lending support was the Federal Reserve’s hawkish attitude, which has led markets to predict four consecutive interest rate hikes ahead. Consequently, the ‘Greenback’ was able to shrug off a worse-than-expected goods trade balance.
US GDP will likely be the most significant trading stimulus today – if America’s economy grew in the first quarter of 2022 as expected, USD could continue to firm.
Canadian Dollar (CAD) Trades Mixed as Oil Prices Soften
The Canadian Dollar (CAD) came under pressure yesterday as oil prices softened on fears of reduced energy demand in China. Bearish trading sentiment also dented support for the ‘Loonie’ in light of Russia’s threats to further limit gas supplies.
Data Releases
Apr 28th 08:45 NZD Balance of Trade (Mar) NZ$329m
Apr 28th 11:00 NZD ANZ Business Confidence (Apr) -30.7
Apr 28th 17:00 EUR ECB 2021 Annual Report N/A
Apr 28th 19:00 EUR Economic Sentiment (Apr) 108
Apr 28th 19:00 GBP BoE Gov Bailey Speech N/A
Apr 28th 22:00 EUR German Inflation Rate Prelim (Apr) 7.2%
Apr 28th 22:30 USD GDP Growth Rate Adv (Q1) 1.1%
Apr 28th 22:30 USD Initial Jobless Claims (23/Apr) 180K