Australian Dollar (AUD) PMIs Fail to Mute RBA Tailwinds
The Australian Dollar (AUD) climbed against its peers at the end of last week despite disappointing PMI data from Australia.
The country’s manufacturing PMI printed at 55.7 while its services counterpart narrowly missed the point of contraction at 50.7. Nevertheless, investors traded bullishly on comments from the Reserve Bank of Australia (RBA) earlier in the week which implied that further rate hikes will be needed.
Today, a lack of significant AU data leaves the ‘Aussie’ to trade on external factors such as risk sentiment. If market mood is upbeat, AUD could rise.
New Zealand Dollar (NZD) Buoyed by RBNZ Rate Speculation
The New Zealand Dollar (NZD) rose on Friday amid speculation that the Reserve Bank of New Zealand (RBNZ) would hike rates by a further 150bps this year.
Risk appetite could affect the ‘Kiwi’ today, lending support if investors strike a bullish tone. Furthermore, ongoing optimism regarding RBNZ policy may bolster the currency.
Pound (GBP) Wavers on Mixed Data
The Pound (GBP) placed on the defensive at the end of last week, after UK retail sales were shown to have contracted for the second consecutive month in June.
Helping to cap Sterling’s losses however was the publication of the UK’s latest preliminary PMI, which printed just above forecast this month.
Looking ahead, the Pound could face additional headwinds at the start of this week with the release of the Confederation of British Industry’s industrial trends figures, if July’s index reports another fall in order growth.
Euro (EUR) Weakens as Manufacturing Activity Contracts
The Euro (EUR) struggled against PMI headwinds on Friday as manufacturing activity contracted in both Germany and the wider Euro area, missing estimates.
Of the German data, S&P Global Market Intelligence remarked ‘a collision of various headwinds in July served to push the German economy into contraction territory for the first time in 2022 so far’, with recession fears taking their toll on the single currency.
Today, Germany’s business climate indictor is expected to record a fall to 90.2 in July. If the data prints as forecast, EUR may trend lower.
US Dollar (USD) Slumps on Abysmal Services PMI
The US Dollar (USD) initially strengthened on Friday, demand for the safe-haven currency being bolstered by a risk-off market mood.
However, the publication of the latest S&P US services PMI quickly reversed this uptrend after reporting the US service sector suffered a sizable contraction in growth this month.
Turning to this week, movement in the US Dollar may be limited in the first half of the session, with USD investors likely to be reluctant to make any aggressive bets ahead of the Federal Reserve’s latest interest rate decision on Wednesday.
Canadian Dollar (CAD) Buoyed by Upbeat Retail Sales Figures
The Canadian Dollar (CAD) firmed on Friday as CAD investors welcomed Canada’s latest retail sales figures, after they reported a larger-than-expected acceleration of sales growth last month.
Canadian retail sales increased by 2.2% in May 2022, rather than the 1.6% expected. This surge in spending was driven by higher sales at gasoline stations and motor vehicle dealers.
Data Releases
Jul 25th 18:00 EUR German Ifo Business Climate (Jul) 90.5
Jul 25th 20:00 GBP CBI Industrial Trends Orders (Jul) N/A
Jul 25th 20:00 GBP CBI Business Optimism Index (Q3) N/A
Jul 25th 22:30 USD Chicago Fed National Activity Index (Jun) 0.05
Jul 26th 00:30 USD Dallas Fed Manufacturing Index (Jul) -12