Australian Dollar (AUD) Climbs as RBA Minutes Impress
The Australian Dollar (AUD) rose against its peers on Tuesday as the minutes from the Reserve Bank of Australia (RBA)’s latest policy meeting revealed that several members were considering a 50bps interest rate hike in August.
Furthermore, inflation is forecast to decline to within the 2-3% range next year. Buoyed by this news, AUD shrugged off headwinds relating to rising Covid cases in parts of China.
Today, a speech from the RBA Governor Philip Lowe could extend the Australian Dollar’s gains if he seems supportive of another aggressive rate hike next month.
New Zealand Dollar (NZD) Trends Up Alongside AUD
The New Zealand Dollar (NZD) strengthened yesterday alongside its sister currency, potentially buoyed by its strong trading relationship with the ‘Aussie’.
Weighing upon the ‘Kiwi’ and capping further gains were Covid-related headwinds from China, risk-off sentiment and falling prices across New Zealand’s main commodities – dairy and beef.
New Zealand Dollar trading may be boosted today by investors’ optimism ahead of tomorrow’s trade balance data. NZ is expected to post a trade surplus of NZ$398m for the month of June.
Pound (GBP) Fluctuates on Mixed Jobs Report
The Pound (GBP) wavered through Tuesday’s session, as UK employment data printed mixed.
The unemployment rate for May remained unchanged at 3.8%, rather than increasing as expected: but real pay saw a record fall, raising concerns over the UK’s cost of living crisis.
Today, the UK’s consumer price index for June may encourage hawkish Bank of England (BoE) rate hike bets if it prints at 9.3% as expected, likely buoying GBP.
Euro (EUR) Enjoys Mixed Support on ECB Optimism
The Euro (EUR) climbed against several rival currencies yesterday as Euro area inflation printed as expected at 8.6%.
The release triggered fresh speculation that the European Central Bank (ECB) may proceed with aggressive monetary policy tightening. According to Reuters, policymakers are discussing the possibility of a 50bps interest rate hike this week.
The single currency may continue to trade on rate hike bets today, potentially firming again if expectations remain upbeat.
US Dollar (USD) Crashes despite Risk-Off Mood
The US Dollar (USD) trended down against its peers on Tuesday amid an ongoing correction in the ‘Greenback’.
Also denting USD sentiment were receding bets for a full-point rate hike from the Federal Reserve next week. Several members of the FOMC admitted they were against the larger rate hike: ‘we want it to be orderly’ said Atlanta Fed President Raphael Bostic.
Today, the US Dollar may be more dependent upon risk sentiment in its various exchange rates, given a lack of significant US data.
Canadian Dollar (CAD) Dips on Oil Price Retreat
Crude oil prices traded down yesterday, dampening support for the commodity-linked Canadian Dollar (CAD).
Comments from Saudi Arabian Foreign Minister Prince Faisal bin Farhan Al Saud triggered the slide in prices, saying there was not a shortage of oil, but a shortage of refining capacity.
Today’s Canadian inflation data may reverse CAD losses, as it is expected to have accelerated to 8.4% in June, pressuring the Bank of Canada (BoC) to maintain its aggressive policy tightening stance.
Data Releases
Jul 20th 09:10 AUD RBA Gov Lowe Speech N/A
Jul 20th 16:00 EUR German PPI (Jun) 33.9%
Jul 20th 16:00 GBP Inflation Rate (Jun) 9.3%
Jul 20th 22:30 CAD Inflation Rate (Jun) 8.4%
Jul 21st 00:00 EUR Consumer confidence flash (Jul) -24.9