Australian Dollar (AUD) Stumbles as Markets Price in RBA Rate Pause
The Australian Dollar (AUD) came under pressure on Friday amid ongoing market bets on a rate pause from the Reserve Bank of Australia (RBA). Above-forecast PPI figures failed to shift market expectations.
However, a recovery in risk appetite over the course of the day helped to cushion losses for the risk-sensitive ‘Aussie’.
The final reading of April’s manufacturing PMI could prompt additional losses in AUD today if it confirms a drop in output. An expected decline in monthly inflation could create further headwinds.
New Zealand Dollar (NZD) Boosted by Risk-On Mood
An improving market mood bolstered the risk-sensitive New Zealand Dollar (NZD) at the end of last week.
The ‘Kiwi’ also benefitted from a pullback in the US Dollar (USD) later in the day.
NZD could make additional gains today if the risk tone remains positive.
Pound (GBP) Gains as Business Confidence Climbs to 11-Month High
The Pound (GBP) rose at the end of last week. Sterling found support from Lloyds Bank’s business confidence figures for March, which hit an 11-month high.
Bank of England (BoE) rate hike bets also strengthened GBP on Friday. Markets continued to price in a 25bps hike from the central bank in May.
With no data for GBP on Monday, BoE bets may be the main driver in Sterling’s movement.
Euro (EUR) Weakens as First Quarter Growth Slows
Disappointing growth figures for Germany and the Eurozone dented confidence in the Euro (EUR) on Friday. First-quarter growth in Germany stagnated, whilst Eurozone Q1 growth rose by less than forecast.
Additionally, cooler German inflation for April deepened EUR’s losses by denting European Central Bank (ECB) interest rate bets.
ECB interest rate hints could inspire movement in the Euro today. On the other hand, recession fears could cap any gains for EUR.
US Dollar (USD) Slips despite Sticky Core Inflation
The US Dollar initially firmed at the end of last week as markets continued to bet on increased odds of another Federal Reserve rate hike.
However, USD shed its gains after the latest reading of the core PCE price index, the Fed’s preferred measure of inflation. Inflation eased slightly, seemingly disappointing USD bulls hoping for a hotter reading.
The latest output data from the US manufacturing sector could see USD lose ground today. April’s ISM PMI is set to remain in negative territory.
Canadian Dollar (CAD) Dips as February’s Growth Surprises to Downside
The Canadian Dollar (CAD) slipped on Friday after below-forecast growth figures for February. An uptick in oil prices limited losses for the ‘Loonie’, though.
If April’s manufacturing PMI edges lower, as expected, CAD could weaken today.
May 1st 09:00 AUD Judo Bank Manufacturing PMI Final (Apr) 48.1
May 1st 11:00 AUD TD-MI Inflation Gauge MoM (Apr) -0.3%
May 1st 23:30 CAD S&P Global Manufacturing PMI (Apr) 48
May 2nd 00:00 USD ISM Manufacturing PMI (Apr) 46.6