Australian Dollar (AUD) Weakens Amid Subdued Market Mood
The Australian Dollar (AUD) weakened in midweek trade as risk-off headwinds weighed upon the perceived-riskier currency.
The Reserve Bank of Australia (RBA) maintains that aggressive policy tightening will be needed to control inflation, increasing fears of a global recession as the economy struggles to keep pace with higher interest rates.
Today, Australian PMI data may affect ‘Aussie’ trading: if manufacturing and services activity fell in June as forecast, AUD could weaken.
New Zealand Dollar (NZD) Sinks on Lack of Significant Data
The New Zealand Dollar (NZD) slumped on Wednesday, depressed by a downbeat market mood and AUD losses.
Adding to ‘Kiwi’ downside, New Zealand’s trade balance missed forecasts of a NZ$328m surplus, printing at NZ$263m.
The New Zealand Dollar may take cues from its sister currency tomorrow, trending lower if risk-off trading sentiment persists.
Pound (GBP) Trades Mixed on UK Inflation Data
The Pound (GBP) softened against several peers yesterday as UK inflation hit a fresh 40-year high in May.
Overall inflation reached 9.1%: although core inflation decreased to 5.9%, the cost-of-living crisis stole headlines as anti-poverty campaigners called upon the government to do more to support vulnerable families.
Today’s flash PMIs today for UK manufacturing and services activity are expected to have fallen on last month, potentially applying more pressure on GBP exchange rates.
Euro (EUR) Climbs despite USD Upside
The Euro (EUR) rose against most of its rival currencies on Wednesday, buoyed by upbeat comments from the European Central Bank (ECB).
Researchers said the EU economy is unlikely to witness a stagflation scenario similar to that seen in the 1970s, as forecasters expect inflation to drop below 2% in the second half of 2023.
Looking ahead could a modest fall in the manufacturing and services PMIs for Germany and the wider Euro area could cap EUR gains today?
US Dollar (USD) Supported by Risk Aversion
The US Dollar (USD) firmed yesterday, as Federal Reserve Chairman Powell began his testimony to Congress.
Powell defended the Fed’s aggressive monetary policy tightening, although the bank faces criticism for reacting too slowly to contain inflation.
Initial jobless claims are expected to have fallen last week, according to today’s data. This could strengthen USD, although tailwinds may be tempered by weak PMI data for June.
Canadian Dollar (CAD) Fluctuates Following Hot Inflation Release
The Canadian Dollar (CAD) wavered yesterday as ‘Loonie’ investors digested a higher-than-expected inflation release. Canadian CPI rose to 7.7% in May, on an annualised basis, rather than the 7.4% forecast.
Capping the ‘Loonie’s gains was a sharp drop in oil prices, which could continue to weigh on CAD exchange rates if the selloff persists today.
Data Releases
Jun 23rd 09:00 AUD S&P Global Manufacturing PMI Flash (Jun) 55
Jun 23rd 09:00 AUD S&P Global Services PMI Flash (Jun) 52.3
Jun 23rd 17:00 EUR ECB General Council Meeting N/A
Jun 23rd 18:00 EUR S&P Global Manufacturing PMI Flash (Jun) 53.9
Jun 23rd 18:00 EUR S&P Global Services PMI Flash (Jun) 55.5
Jun 23rd 18:30 GBP S&P Global/CIPS Manufacturing PMI Flash (Jun) 53.7
Jun 23rd 18:30 GBP S&P Global/CIPS Services PMI Flash (Jun) 53
Jun 23rd 22:30 USD Initial Jobless Claims (18/Jun) 227K
Jun 23rd 23:45 USD S&P Global Manufacturing PMI Flash (Jun) 56
Jun 23rd 23:45 USD S&P Global Services PMI Flash (Jun) 53.5