Australian Dollar (AUD) Benefits from Chinese Tailwinds
The Australian Dollar (AUD) firmed against the majority of its peers at the end of last week, as positive risk flows lent support to the currency.
One reason for optimism was the People’s Bank of China’s (PBoC) decision to cut its five-year loan prime rate by 15 basis points, to counter an economic slowdown. The ‘Aussie’ benefitted in particular due to its role as a proxy for the Chinese economy.
A speech from Reserve Bank of Australia (RBA) speaker Christopher Kent may affect AUD trading today, lending a possible upside if Kent strikes a hawkish tone.
New Zealand Dollar (NZD) Bolstered by Trade Surplus
The New Zealand Dollar (NZD) rose through Friday’s session as the country’s trade balance revealed an unexpected surplus for the month of April.
New Zealand’s trade balance had been expected to reveal a deficit of NZ$410m, but instead printed a surplus of NZ$584m. Also buoying the ‘Kiwi’, market sentiment remained positive overall, supporting risk-on currencies.
Into today, NZD may fall ahead of an expected decline in retail sales at the beginning of 2022.
Pound (GBP) Trends Up on UK Retail Data
The Pound (GBP) found support at the end of last week, as UK retail sales rose in April, rather than contracting as expected.
Sales grew by 1.4% instead of falling by 0.2% as forecast. The recovery was driven by a rise in food store sales volumes as people spent more on alcohol and tobacco. Analysts speculate that spending patterns may reflect consumers reduced social activity outside the home.
A lack of UK data leaves Sterling to trade on external factors today. If Brexit headwinds persist over the Northern Ireland protocol, GBP could come under pressure.
Euro (EUR) Dips as German PPI Rises Above Forecasts
The Euro (EUR) tumbled against its peers on Friday as Germany’s PPI report emphasised inflationary pressures in the Eurozone’s biggest economy.
Producer prices rose by 33.5% year-on-year in April, rather than 31.5% as expected. Furthermore, downbeat comments from the European Central Bank (ECB) highlighted the possibility of a recession in the bloc.
Today’s German business climate indictor could apply EUR headwinds, if it declined in May as expected.
US Dollar (USD) Subdued by Lack of US Data
The US Dollar (USD) weakened against several peers at the end of last week, as a lack of significant data exposed the currency to losses.
Fears over the future of the US economy continued to weigh on ‘Greenback’ sentiment. Economists warned of a possible ‘hard landing’ as the Federal Reserve embarks on an aggressive tightening cycle, which some fear could damage the US economy.
Looking ahead, a lack of notable US data could leave the ‘Greenback’ to trade without a clear direction.
Canadian Dollar (CAD) Wavers as WTI Prices Strengthen
The Canadian Dollar (CAD) strengthened against several peers on Friday as crude oil prices were buoyed by a tight supply outlook.
Although flat on the week, WTI futures remained almost $5 higher per barrel versus Thursday’s lows.
Data Releases
May 23rd 09:05 AUD RBA Kent Speech N/A
May 23rd 18:00 EUR German Ifo Business Climate (May) 91.4
May 23rd 22:30 USD Chicago Fed National Activity Index (Apr) 0.35