Australian Dollar Falls on Risk-Off Stimuli
The Australian Dollar (AUD) sank against its peers at the beginning of the week as risk assets – including growth-sensitive commodities such as oil and coal – weakened.
A worrying fall in Chinese export growth also took its toll on the ‘Aussie’ as it was yet another sign that China’s economy is slowing down.
Looking ahead, today’s business confidence and finalised retail data may affect AUD exchange rates. If business confidence fell as anticipated, the ‘Aussie’ may come under further pressure.
New Zealand Dollar (NZD) Weakens Overall
The New Zealand Dollar (NZD) tumbled on Monday, inspired by movement in its sister currency. A lack of NZ data left the ‘Kiwi’ to trade on AUD dynamics.
Negative trading sentiment likewise dampened support for the risk-sensitive NZD, while one of the country’s key exports, dairy, weakened in price.
A further lack of significant data leaves the New Zealand Dollar to trade on external factors tomorrow; if global risk sentiment improves, NZD is likely to enjoy support.
Pound (GBP) Sterling Climbs on Brief USD Decline
The Pound (GBP) rebounded briefly against its peers yesterday, as modest downside in the US Dollar (USD) lent some strength.
USD profit-taking helped to counteract Sterling headwinds in the form of a dovish Bank of England (BoE) – the bank’s Michael Saunders remarked that the UK’s CPI and key measures of longer-term inflation expectations are uncomfortably high.
Today’s report from the British Retail Consortium could reverse GBP gains, if sales fell in April as forecast.
Euro (EUR) Finds Tailwinds on Hawkish ECB
The Euro (EUR) managed to trend up at the beginning of the week in spite of low risk appetite and concerns regarding the possibility of a European recession.
Possibly buoying the single currency were optimistic expectations from the European Central Bank (ECB), following policymakers’ recent hawkish turn. Furthermore, policy divergence from the Fed weighed less heavily on EUR as markets began to worry that tightening monetary conditions could impede economic growth.
Germany’s economic sentiment index could affect the Euro today: morale is expected to have fallen to -42 in May, potentially inspiring headwinds.
US Dollar (USD) Wavers, Losses Capped by Upbeat Fedspeak
The US Dollar (USD) enjoyed upside on Wednesday as a risk-off mood drew safe haven support to the currency.
Upbeat speeches from the Federal Reserve’s Raphael Bostic and Neel Kashkari also boosted the ‘Greenback’, although some profit-taking occurred later in the European session.
Into today, the USD could find further strength on additional Fed speeches; economic optimism is also expected to have climbed to 47.
Canadian Dollar (CAD) Faces Oil-Linked Downside
The Canadian Dollar (CAD) retreated from its opening levels yesterday against the majority of its rivals, as oil prices sank.
The ‘Loonie’ retained some upside, however, as economists expect the Bank of Canada to deliver a 50bps rate hike at its next meeting.
Data Releases
May 10th 09:01 GBP BRC Retail Sales Monitor (Apr) -0.1%
May 10th 11:30 AUD NAB Business Confidence (Apr) 12
May 10th 11:30 AUD Retail Sales Final (Mar) 1.6%
May 10th 19:00 EUR ZEW Economic Sentiment Index (May) -45
May 10th 19:00 EUR German ZEW Economic Sentiment Index (May) -42
May 10th 20:00 GBP Queen’s Speech 2022 N/A
May 10th 21:40 USD Fed Williams Speech N/A
May 10th 22:30 USD Fed Bostic Speech N/A
May 11th 00:00 USD IBD/TIPP Economic Optimism (May) 47
May 11th 03:00 USD Fed Kashkari Speech N/A
May 11th 03:00 USD Fed Waller Speech N/A
May 11th 05:00 USD Fed Mester Speech N/A