Australian Dollar (AUD) Rises after Exports Leap
An upbeat market mood lent some support to the risk-sensitive Australian Dollar (AUD) yesterday. A surprise jump in Australian export prices following the rollback of China’s Covid-19 restrictions also bolstered AUD.
A drop in Chinese industrial profits limited AUD’s gains, however, due to the ‘Aussie’ Dollar’s status as a proxy currency for China’s economy.
The Australian Dollar may benefit from an expected rise in first quarter PPI today. However, recent inflation data has been cooler than expected, and a surprise to the downside could pull AUD lower.
New Zealand Dollar’s (NZD) Gains Capped as Business Confidence Declines
The risk-sensitive New Zealand Dollar (NZD) was lifted by a return of risk appetite on Thursday.
However, New Zealand’s latest business confidence indicator fell to a three-month low, which dented confidence in the ‘Kiwi’.
A persistent risk-on mood could see the ‘Kiwi’ make additional gains today.
Pound (GBP) Slips amid Lack of Data
Thin trading conditions left the Pound (GBP) vulnerable to domestic headwinds on Wednesday. The prospect of fresh industrial action prompted some selling around Sterling.
On the other hand, GBP’s losses were cushioned by continued bets on a 25bps interest rate hike from the Bank of England (BoE).
With nothing on the calendar for Sterling today, interest rate bets may drive movement in the currency.
Euro (EUR) Loses Ground after Inflation Expectations Ease
The Euro (EUR) stumbled yesterday after the Eurozone’s latest economic sentiment index missed forecasts. The data also revealed a decline in consumer inflation expectations, thereby denting European Central Bank (ECB) rate hike bets.
A rising US Dollar (USD) also put pressure on the single currency, due to EUR’s negative correlation with USD.
This evening, Eurozone GDP is in the spotlight. An expected recovery in the first quarter of 2023 could boost EUR exchange rates.
US Dollar (USD) Climbs despite Slower GDP Growth
Evidence of underlying inflationary pressures boosted the US Dollar on Thursday, despite evidence of slower economic growth.
First quarter growth cooled to 1.1%, down from 2.6%. However, price growth accelerated more than expected, indicating that inflation remains persistently high. The data inspired renewed Federal Reserve rate hike bets.
Turning to today, the core PCE price index – the Fed’s preferred measure of inflation – is expected to remain at 0.3% month over month. If this prints as forecast, then it could push USD higher.
Canadian Dollar (CAD) Underpinned by Oil Price Rise
The commodity-linked Canadian Dollar (CAD) firmed on Thursday evening thanks to an uptick in oil prices and a stronger US Dollar.
A slowdown in February’s growth figures could weigh on CAD today if they print as forecast.
Apr 28th 11:30 AUD PPI (Q1) 0.8%
Apr 28th 19:00 EUR GDP Growth Rate (Q1) 0.2%
Apr 28th 22:00 EUR German Inflation Rate (Apr) 7.3%
Apr 28th 22:30 CAD GDP (Feb) 0.2%
Apr 28th 22:30 USD Core PCE Price Index (Mar) 4.5%