Australian Dollar (AUD) Buoyed as Commodities Continue to Climb
The Australian Dollar (AUD) strengthened against several peers yesterday despite fluctuating risk sentiment.
Lending support was the rise in value of key Australian commodity exports. Both coal and iron ore prices strengthened on Thursday.
Today, PMI data may cause the ‘Aussie’ to weaken as both manufacturing and service-sector activity are expected to have fallen in July.
New Zealand Dollar (NZD) Faces Trade Balance Headwinds
The New Zealand Dollar (NZD) sank overall in the early European session following a disappointing trade balance release.
The country’s balance of trade printed at a NZ$701m deficit rather than the NZ$398m surplus expected. The ‘Kiwi’ shook off some of its losses later in the session, however, on improving risk sentiment.
NZD may trade on AU data today, given a lack of domestic releases. If Australia’s PMIs dip as forecast, the New Zealand Dollar may weaken.
Pound (GBP) Drops as Government Borrowing Jumps
The Pound (GBP) tumbled yesterday as risk sentiment wavered and the UK’s government debt printed higher than expected.
June added a further £23bn to the current government deficit – the highest level in 14 months and almost twice the amount recorded in May. Experts blamed inflation in part, emphasising the difficulty of keeping borrowing under control while addressing rocketing living costs.
UK retail data could dent Sterling today, as sales are expected to have contracted a further 0.3% in June.
Euro (EUR) Firms Following ECB Decision
The Euro (EUR) strengthened on Thursday as the European Central Bank raised interest rates by 50bps to 0.5%.
Furthermore, the ECB added that further normalisation of interest rates would be appropriate at upcoming meetings. It agreed to provide help to indebted nations via its new Transmission Protection Instrument, which is intended to cap borrowing costs and limit fragmentation.
Eurozone PMIs may dampen EUR support somewhat during today’s session, as July’s preliminary releases are expected to reveal a decrease in manufacturing and service-sector activity.
US Dollar (USD) Succumbs to Data-Led Losses
The US Dollar (USD) lost some of its previous gains yesterday as both key US data releases printed below forecasts.
Initial jobless claims revealed that 251,00 people filed new claims for unemployment benefits last week, compared with 244,000 the week before. Meanwhile, the Philadelphia Fed manufacturing index printed at -12.3 in July – an active decline rather than the flat reading expected.
Today, US PMI data is likely to apply further pressure to USD exchange rates as both manufacturing and service-sector activity look to have slowed this month.
Canadian Dollar (CAD) Weakens on Oil Price Downturn
The Canadian Dollar (CAD) dropped against several peers on Thursday as a fall in the price of crude oil capped support for the ‘Loonie’.
Retail data is forecast to report a rise in Canadian sales today, potentially boosting CAD if it prints as expected.
Data Releases
Jul 21st 09:00 AUD S&P Global Manufacturing PMI Flash (Jul) 56
Jul 21st 09:00 AUD S&P Global Services PMI Flash (Jul) 52.3
Jul 21st 16:00 GBP Retail Sales (Jun) -0.3%
Jul 21st 18:00 EUR S&P Global Manufacturing PMI Flash (Jul) 51
Jul 21st 18:00 EUR S&P Global Services PMI Flash (Jul) 52
Jul 21st 18:30 GBP S&P Global/CIPS Manufacturing PMI Flash (Jul) 52
Jul 21st 18:30 GBP S&P Global/CIPS UKServices PMI Flash (Jul) 53
Jul 21st 22:30 CAD Retail Sales (May) 1.6%
Jul 21st 23:45 USD S&P Global Manufacturing PMI Flash (Jul) 52
Jul 21st 23:45 USD S&P Global Services PMI Flash (Jul) 52.6