Australian Dollar (AUD) Buoyed by Retail Data
The Australian Dollar (AUD) rose against its peers in midweek trade, as retail sales exceeded forecasts, and service-sector activity increased in April.
April’s finalised services PMI printed at 56.1, above March’s reading of 55.6 – albeit lower than initial estimates. Retail sales, meanwhile, rose 1.6% in March rather than 0.5% as forecast.
Into today, Australia’s trade surplus is expected to reach A$8.5bn for the month of March, potentially boosting the ‘Aussie’ higher still.
New Zealand Dollar (NZD) Rises on AUD Strength
The New Zealand Dollar (NZD) climbed through Wednesday’s session, as strength in its sister currency lent support to the ‘Kiwi’.
Further supporting NZD was relatively upbeat market mood. A new round of sanctions was announced by the European Commission, which will phase out Russian crude imports within six months.
Today, a lack of NZ data leaves the ‘Kiwi’ to trade on external factors. If AUD continues to enjoy upside, the New Zealand Dollar may extend its gains.
Pound (GBP) Trends Lower on Lack of Significant Data
The Pound (GBP) found some support early yesterday, before sliding on central bank policy divergence.
Hawkish expectations for the Federal Reserve emphasised the Bank of England’s (BoE) comparatively dovish stance: the BoE is expected to hike rates by 25bps today. Economists predict the bank will need to deliver a clear hawkish outcome to change the negativity surrounding the currency.
Ahead of the BoE decision, the UK’s services PMI could influence Sterling trading. If April’s finalised PMI prints lower than March’s, GBP may face headwinds.
Euro (EUR) Strengthens despite Mixed Data
The Euro (EUR) firmed in midweek trade, although the currency’s gains were tempered by the announcement of fresh EU sanctions targeting Russia.
Meanwhile, Germany’s trade balance exceeded expectations, printing at €9.7bn rather than €9.5bn. Services activity in the bloc’s largest economy missed estimates, although the wider Euro-area PMI printed as expected at 57.7; retail sales in March fell by 0.4%.
German factory orders may depress the single currency today, if they likewise fell in March; elsewhere, US Dollar (USD) dynamics could also influence Euro trading.
US Dollar (USD) Tumbles as Rate Hike Priced In
The US Dollar (USD) fell against its peers on Wednesday despite expectations of aggressive monetary policy tightening from the Federal Reserve.
Markets had already priced in the 50bps rate hike expected, risk-on market sentiment therefore suppressed the ‘Greenback’ in its capacity as a safe-haven currency.
US jobs data may affect the USD today – if initial jobless claims increased as expected in the final week of April, the US Dollar could sink lower.
Canadian Dollar (CAD) Strengthens, Falls on Trade Balance Disappointment
The Canadian Dollar (CAD) jumped yesterday, only to sink back down as Canada’s trade surplus came in below forecasts. Rising oil prices were unable to buoy the currency.
A speech from Bank of Canada (BoC) deputy governor Lawrence Schembri might affect the ‘Loonie’ today, lending possibly support if Schembri strikes a hawkish tone.
Data Releases
May 5th 11:30 AUD Balance of Trade (Mar) A$8.5bn
May 5th 16:00 EUR German Factory Orders (Mar) -1.1%
May 5th 18:30 GBP S&P Global/CIPS Services PMI Final (Apr) 58.3
May 5th 21:00 GBP BoE Interest Rate Decision 1%
May 5th 22:30 USD Nonfarm Productivity Prelim (Q1) -5.4%
May 5th 22:30 USD Initial Jobless Claims (30/Apr) 182K
May 5th 23:55 CAD BoC Gov Schembri Speech N/A