Australian Dollar (AUD) Drops as Inflation Hits 6.1%
The Australian Dollar (AUD) stumbled on Wednesday as the consumer price index for Q2 2022 printed lower than forecast.
The CPI still hit its highest point in 21 years as food, fuel and accommodation all increased in price. But the weaker-than-expected reading prompted some AUD investors to revise their bets for future interest rate hikes from the Reserve Bank of Australia (RBA).
Today’s docket may confirm that Australian retail sales rose in June, albeit by less than the previous month. Slowing sales growth could hurt AUD if the data prints at or below expectations.
New Zealand Dollar (NZD) Drops as Commodities Weaken
The New Zealand Dollar (NZD) fell against its peers in midweek trade, as a lack of data exposed the currency to losses and the country’s key commodities depreciated.
Also weighing upon the ‘Kiwi’ were downbeat expectations for today’s business confidence release and a drop in the Australian Dollar. As AUD falls, it applies pressure to its sister currency.
Business confidence in July is forecast to have fallen from -62.6 to -65. This would be the 13th consecutive month the index prints in negative territory and is likely to dent NZD sentiment further.
Pound (GBP) Supported as Economists Contemplate Upcoming BoE Decision
The Pound (GBP) drew modest support yesterday amid ongoing speculation the Bank of England (BoE) will hike interest rates by 50bps in August.
A poll of economists considered that a quarter-point hike is the most likely scenario, but that it is a very close call considering the state of inflation in the UK.
Elsewhere, UK consultants warn that energy bills could hit £3,850 per year from January 2023, capping Sterling gains.
A lack of data today leaves GBP to trade on external factors. Further scrutiny of UK living costs may drag on Sterling sentiment.
Pound (GBP) Finds Support as UK Retailer Posts Gains
The Pound (GBP) may have been buoyed yesterday by news that UK retailer Reckitt Benckiser has swelled its revenues this year.
By raising prices across essential household items, the company was able to increase profits while simultaneously growing sales volumes.
Elsewhere, UK consultants warn that energy bills could hit £3,850 per year from January 2023, capping Sterling gains.
A lack of data today leaves GBP to trade on external factors. Further scrutiny of UK living costs may inspire Sterling downside.
Euro (EUR) Trades Unevenly as Gas Flows are Cut
The Euro (EUR) wavered through Wednesday’s session as Russia reduced gas flows to Europe via the Nord Stream 1 pipeline.
This stoked Eurozone recession fears amid warnings Europe will face a gas shortage this winter.
Gas concerns may continue to dominate EUR trading today – but the single currency may also be influenced by July’s economic sentiment and German inflation. If the latter fell in July as forecast, the Euro may weaken.
US Dollar (USD) Fluctuates Ahead of FOMC Event
The US Dollar (USD) traded in a mixed range on Wednesday as investors were cautious of placing hawkish bets ahead of the Federal Reserve’s interest rate decision.
Markets expect a 75bps interest rate hike; Chairman Powell’s speech press conference will be scrutinised for further trading impetus.
Lending some support to the ‘Greenback’, durable goods orders climbed by 1.9% in June rather than falling as expected.
Following the Fed’s rate decision, today’s GDP is expected to report growth rebounded by 0.5% in Q2, which, if confirmed, may boost USD.
Canadian Dollar (CAD) Trends Sideways as Oil Prices Rise
The Canadian Dollar (CAD) traded in a mixed range yesterday, despite hawkish forecasts for the Bank of Canada (BoC) and rising crude prices.
Data Releases
Jul 28th 11:00 NZD ANZ Business Confidence (Jul) -65
Jul 28th 11:30 AUD Retail Sales Prelim (Jun) 0.5%
Jul 28th 19:00 EUR Economic Sentiment (Jul) 102
Jul 28th 22:00 EUR German Inflation Rate Prelim (Jul) 7.4%
Jul 28th 22:30 USD GDP Growth Rate Adv (Q2) 0.5%
Jul 28th 22:30 USD Initial Jobless Claims (23/Jul) 253K