Australian Dollar (AUD) Enjoys RBA Tailwinds
The Australian Dollar (AUD) firmed during Tuesday’s Asian session, as the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting were released.
The minutes acknowledged ongoing inflationary pressures and struck a hawkish tone overall, revealing that a 40-bps rate hike was considered at May’s meeting. Subsequently, economists are speculating whether such a steep rise may be considered again in June.
A lack of significant data leaves the ‘Aussie’ to trade on external factors today. If market sentiment is upbeat, AUD could enjoy risk-on support.
New Zealand Dollar (NZD) Firms on AUD Support
The New Zealand Dollar (NZD) climbed in tandem with the Australian Dollar yesterday morning, as strength in the ‘Aussie’ lent support to its sister currency.
NZD upside then weakened slightly through the European session, given a lack of NZ data; key exports milk and beef also fell in value, dampening ‘Kiwi’ prospects.
Into today, NZD will likely trade on risk sentiment amongst other factors – if commodities continue to devalue, the New Zealand Dollar could trend lower.
Pound (GBP) Rises as Employment Data Impresses
The Pound (GBP) was boosted against its peers on Tuesday as a better-than-expected jobs report printed the lowest unemployment rate since 1974.
Furthermore, average earnings (including bonuses) increased by 7% rather than the forecast 5.4%, and the number of people in work rose by 83,000. UK Chancellor Rishi Sunak commented that the jobs market remained robust despite global challenges.
Looking ahead, today’s CPI is expected to print at 9.1%, putting the Bank of England (BoE) under pressure to tighten monetary policy and potentially inspiring a downside in light of weaker-than-expected economic growth.
Euro (EUR) Climbs as GDP Exceeds Forecasts
The Euro (EUR) rose through yesterday’s session as economic growth in the Euro area exceeded expectations.
The second-estimate GDP release printed at 0.3% for Q1 2022, as opposed to the 0.2% initially recorded. Meanwhile, employment during the same period increased by 0.5%.
Euro area inflation is expected to inform EUR exchange rates today. If the finalised reading prints as expected at 7.5%, the single currency could firm on hopes of policy tightening from the European Central Bank (ECB).
US Dollar (USD) Weakens on Corrective Turndown
The US Dollar (USD) sank on Tuesday as a bullish tilt among currency markets sapped demand for the safe-haven ‘Greenback’.
Strong retail data did little to inspire a USD upside, while better-than-expected industrial production also failed to boost the currency: US production rose 1.1% in April, more than double the 0.5% forecast, while sales grew by 0.9%, as expected.
A lack of significant data exposes the ‘Greenback’ to possible downside pressures tomorrow, although ongoing conflict in Ukraine could attract some safe-haven support.
Canadian Dollar (CAD) Softens despite Projected WTI Gains
The Canadian Dollar (CAD) dipped against its peers yesterday, despite a lift in crude oil prices.
According to the CME Group’s flash data, traders added around 14,600 contracts to their open interest positions at the beginning of the week.
Today’s inflation reading could affect CAD exchange rates. If Canada’s CPI remained at 6.7% in April, ‘Loonie’ sentiment may rise on easing cost pressures.
Data Releases
May 18th 08:45 USD Fed Evans Speech N/A
May 18th 16:00 GBP Inflation Rate (Apr) 9.1%
May 18th 17:00 EUR ECB Non-Monetary Policy Meeting N/A
May 18th 19:00 EUR Inflation Rate Final (Apr) 7.5%
May 18th 22:30 CAD Inflation Rate (Apr) 6.7%
May 19th 06:00 USD Fed Harker Speech N/A