Australian Dollar (AUD) Loses Ground as Chinese Inflation Softens
Cooler-than-forecast Chinese inflation data weighed on the Australian Dollar (AUD) yesterday. China’s inflation rate fell to 0.1% in April, its lowest point since deflation in February 2021.
The release pointed to a weakening recovery in China. This weighed on the ‘Aussie’, which often trades as a proxy for the Chinese economy.
Consumer confidence figures for May could see AUD slip again this morning. Household morale is set to fall from 85.8 to 82.1.
Cautious Market Mood Dents New Zealand Dollar (NZD)
The risk-sensitive New Zealand Dollar (NZD) came under pressure from a retreat in global risk appetite on Thursday.
Additionally, a downbeat mood in the commodity markets deepened losses for the resource-linked ‘Kiwi’.
Turning to today’s session, a forecast expansion in New Zealand’s manufacturing sector could bolster NZD.
Pound (GBP) Fluctuates after BoE Rate Hike
The Pound (GBP) saw volatile movements yesterday after the Bank of England’s (BoE) interest rate decision. Sterling initially leaped amid signals the BoE would consider additional tightening following this month’s 25bps hike.
GBP weakened as the day went on, however. Dovish comments from BoE Governor Andrew Bailey pointed to easing inflationary pressures in the UK.
First-quarter GDP figures this afternoon could push the Pound higher. The UK economy is forecast to have grown by 0.1% in Q1 2023, adding to evidence that the country has avoided a recession.
Euro (EUR) Gains amid Downbeat Market Mood
The Euro (EUR) firmed over the course of Thursday. A souring risk appetite strengthened the safer single currency.
Signals that the European Central Bank (ECB) will continue to raise interest rates also underpinned EUR after Eurozone consumer inflation expectations edged higher in March.
A speech from ECB Vice President Luis de Guindos this afternoon could lift the Euro if he hints at additional policy tightening.
US Dollar (USD) Bolstered by Pullback in Risk Appetite
A risk-off market mood bolstered the safe-haven US Dollar (USD) on Thursday. Concerns of a slowdown in China – the world’s second-largest economy – rattled markets.
On the other hand, worse-than-expected PPI figures and an above-forecast rise in jobless claims capped USD’s gains.
USD could climb this evening if Federal Reserve rate setter Michelle Bowman strikes a hawkish tone.
Canadian Dollar (CAD) Struggles as Oil Prices Stumble
The commodity-linked Canadian Dollar (CAD) was dented by a decline in oil prices yesterday. Crude prices weakened after an unexpected increase in US inventories.
With no data on the calendar for the ‘Loonie’ today, the currency could be undermined by softer oil prices.
May 12th 08:30 NZD Business NZ PMI 50.7
May 12th 11:30 AUD Westpac Consumer Confidence Index (May) 82.1
May 12th 16:00 GBP GDP Growth Rate (Q1) 0.1%
May 12th 17:00 USD Fed Bowman Speech
May 12th 21:15 GBP BoE Pill Speech
May 13th 00:00 USD Michigan Consumer Sentiment 63