Australian Dollar (AUD) Gains on Latest Jobs Report
The Australian Dollar (AUD) gained during Thursday’s Asian session, as April’s unemployment rate printed at 3.9%, remaining at its lowest level since the 1970s.
The ‘Aussie’ then encountered some downside, however, as a risk-off mood was triggered by fears of a recession across several economies. In addition, political uncertainty ahead of Saturday’s Federal Election caused some turbulence for AUD.
A lack of AU data leaves the Australian Dollar to trade on external factors today. If market mood remains subdued, AUD could slip against its peers.
New Zealand Dollar (NZD) Firms Ahead of Trade Balance
The New Zealand Dollar (NZD) managed to climb through yesterday’s session, despite risk-off headwinds and downbeat news from China.
Economists worry that China’s rigid adherence to its zero-Covid policy is likely to hurt international trade, as the country prioritises its battle with coronavirus over resuming global engagement and investment.
Today’s trade balance data is expected to reveal an increased deficit of NZ$410m, potentially weighing upon ‘Kiwi’ sentiment ahead.
Pound (GBP) Growth Capped by Poor Economic Outlook
The Pound (GBP) came under pressure on Thursday as fears of a global economic slowdown dented trading prospects.
While the UK’s manufacturing output grew at its fastest pace in ten months over the three months to May, confidence amongst UK manufacturers fell on anticipated price hikes. The data illustrated the ways in which painfully high inflation is hitting consumers and businesses alike.
UK retail sales are likely to influence GBP exchange rates later today – a contraction would reflect the reduced spending power of UK citizens, possibly dissuading the Bank of England (BoE) from hiking rates imminently.
Euro (EUR) Finds Support on ECB Tailwinds
The Euro (EUR) was able to recoup some losses in the second half of yesterday’s European session, as hawkish comments taken from the European Central Bank’s (ECB) meeting minutes lent support.
The central bank clarified that despite intentions to begin hiking rates ‘some time’ after the conclusion of quantitative easing, it would consider a timely rate rise should conditions warrant it.
Today’s German PPI data is expected to reveal an increase in producer price inflation to 31.5% year on year in April. Such a reading would emphasise rising inflationary pressures, putting more pressure upon the ECB to tighten monetary policy.
US Dollar (USD) Nosedives as Wall Street Opens Lower
The US Dollar (USD) sank through Thursday as US stocks posted the biggest daily drop in almost two years, leading to a sell-off in US Treasury notes.
The slide was sparked by US retail giants warning that customers are buying fewer high-ticket items. With spending power expected to be eroded further through interest rate rises, markets worry that the retailers’ pain is a precursor for more struggles to come. An increase in US jobless claims further dampened USD demand.
A lack of significant data leaves the ‘Greenback’ exposed to further losses today – Wall Street opened lower at the beginning of the American session, as economic fears loom.
Canadian Dollar (CAD) Dented by Risk Aversion
The commodity-linked Canadian Dollar (CAD) softened against its peers yesterday as risk-off headwinds drew investors towards safe-haven currencies.
While crude oil prices rose towards the end of the European session and Bank of Canada (BoC) forecasts remained optimistic, whispers of a slow economic recovery in China dampened prospects for oil demand ahead.
Data Releases
May 20th 08:45 NZD Balance of Trade (Apr) NZ$-410m
May 20th 16:00 EUR German PPI (Apr) 1.4%
May 20th 16:00 GBP Retail Sales (Apr) -0.2%
May 21st 00:00 EUR Consumer Confidence Flash (May) -21.5