Australian Dollar (AUD) Dives on Chinese Headwinds
The Australian Dollar (AUD) sank against its peers in the Asian trading session, as disappointing data from China dimmed ‘Aussie’ prospects.
As a proxy for the Chinese economy, AUD dipped on weaker-than-expected industrial production and retail data for April, as sales fell by 11.1% rather than 6.1% as forecast. The currency then rebounded somewhat as the market mood improved.
The Reserve Bank of Australia’s (RBA) latest meeting minutes will be released today, potentially inspiring upside if the bank strikes a hawkish tone.
New Zealand Dollar (NZD) Echoes ‘Aussie’ Movement
The New Zealand Dollar (NZD) likewise dimmed against the majority of its rivals following the release of China’s downbeat data.
Subsequently, the ‘Kiwi’ rebounded as trading sentiment brightened ahead of several medium-impact reports, although the ongoing conflict in Ukraine capped gains.
Given a lack of domestic data, NZD may trade today on AUD dynamics, enjoying possible tailwinds if the RBA’s minutes strike an upbeat tone.
Pound (GBP) Under Pressure on Weak Economic Outlook
The Pound (GBP) slipped during Monday’s European session, as economists forecast that the UK’s economic troubles would ‘only get worse’.
Following the contraction of March’s GDP, analysts predict that the country’s cost-of-living crisis will present a continuing threat to economic growth. Energy bills are expected to soar again later this year, further hammering struggling households.
Today’s employment data may provide some trading impetus: any surprise results could have a big impact on Sterling.
Euro (EUR) Retains Support as Trade Balance Misses Estimates
The Euro (EUR) enjoyed upside support at the beginning of the week, despite a worse-than-expected trade balance.
The Euro area sustained a trade deficit of €16.4bn in March 2022. However, the downside was capped by upbeat German wholesale prices. European growth forecasts were mixed, though still see inflation at 6.1% in 2022 – potentially necessitating a European Central Bank (ECB) intervention.
The latest Eurozone employment change and GDP growth rate estimates for the first quarter of 2022 could affect EUR this evening, ahead of a speech from ECB President Christine Lagarde.
US Dollar (USD) Weakens as Manufacturing Data Disappoints
The US Dollar (USD) encountered headwinds yesterday, as the NY Empire State manufacturing index printed at -11.6 as opposed to 17 as forecast.
Business activity in New York State declined as new orders decreased and shipments fell at the fastest pace since early in the pandemic.
Meanwhile, a speech from the Federal Reserve’s John Williams lent some upside, indicating monetary policy can bring economic demand in line with supply.
Retail data could shape USD exchange rates today, inspiring tailwinds if sales increased in April as expected.
Canadian Dollar (CAD) Exchange Rates Soften on Crude Price Downturn
The Canadian Dollar (CAD) traded in a mixed range on Monday, incurring a modest downside as oil prices weakened.
Concerns over an economic downturn in China added to worries about faltering fuel demand, although the EU’s impending ban on Russian crude acted as a tailwind for WTI.
Data Releases
May 17th 11:30 AUD RBA Meeting Minutes N/A
May 17th 16:00 GBP Unemployment Rate (Mar) 3.8%
May 17th 16:00 GBP Average Earnings excl. Bonus (Mar) 4.1%
May 17th 19:00 EUR Employment Change Prelim (Q1) 0.5%
May 17th 19:00 EUR GDP Growth Rate 2nd est. (Q1) 0.2%
May 17th 22:00 USD Fed Bullard Speech N/A
May 17th 22:30 USD Retail Sales (Apr) 0.8%
May 17th 23:15 USD Industrial Production (Apr) 0.4%
May 17th 23:15 USD Fed Harker Speech N/A
May 18th 03:00 EUR ECB Lagarde Speech N/A
May 18th 04:00 USD Fed Powell Speech N/A
May 18th 04:30 USD Fed Mester Speech N/A