Australian Dollar (AUD) Recovers as Risk Appetite Improves
The Australian Dollar (AUD) came under pressure from below-forecast wage growth figures yesterday. The cooler data dented bets of another rate hike from the Reserve Bank of Australia (RBA).
The risk-sensitive ‘Aussie’ found support from an improving market mood as the day went on, though. A bullish impulse in markets saw AUD strengthen through European trade.
This morning’s jobs data could lift AUD today if unemployment held steady at 3.5% in April. The figures could prompt fresh bets on additional RBA tightening.
New Zealand Dollar (NZD) Climbs amid Forecasts of RBNZ Rate Hikes
A return of global risk appetite boosted the risk-sensitive New Zealand Dollar (NZD) yesterday.
Revised rate-hike forecasts for the Reserve Bank of New Zealand (RBNZ) also strengthened the ‘Kiwi’. Westpac economists predicted that the central bank could raise rates as high as 6% by 2024.
Today’s forecast drop in first-quarter PPI could dampen these bets however, and therefore weigh on NZD.
Pound (GBP) Cushioned by BoE Bailey Comments
The Pound (GBP) edged lower on Wednesday as the UK currency continued to weaken in the wake of softer British employment data.
In the afternoon, comments from Bank of England (BoE) Governor Andrew Bailey limited GBP’s losses. The BoE chief acknowledged that the UK was dealing with a wage-price spiral, which could prompt more rate rises from the bank.
With no data releases today, movement in the Pound could be muted.
Euro (EUR) Falls amid USD Strength
The Euro (EUR) suffered from its negative correlation with the US Dollar (USD) yesterday, with the former weakening as the latter rallied.
A slight downward revision to month-on-month inflation in the Eurozone added to EUR’s downside, with markets marginally trimming their bets on more rate rises from the European Central Bank (ECB).
Turning to today’s session, EUR could gain ground if ECB President Christine Lagarde strikes a hawkish tone in her speech this evening.
US Dollar (USD) Recovers amid Fresh Fed Bets
The US Dollar was bolstered by Federal Reserve rate hike bets on Wednesday after hawkish comments from rate setters.
USD also found renewed confidence after news that negotiations had begun to resolve the US debt ceiling crisis.
If today’s jobless claims figures remain close to previous highs, USD could slip amid signs of a cooler US labour market.
Canadian Dollar (CAD) Bolstered by Oil Price Rise
A rise in oil prices helped the commodity-linked Canadian Dollar (CAD) to edge higher on Wednesday.
Looking to today, the ‘Loonie’ could see additional gains if oil prices continue to rise.
May 18th 11:30 AUD Unemployment Rate (Apr) 3.5%
May 18th 19:00 EUR ECB President Lagarde Speech
May 18th 22:30 USD Initial Jobless Claims (13/May) 254,000
May 18th 22:30 USD Philadelphia Fed Manufacturing Index (May) -19.8
May 18th 23:05 USD Fed Jefferson Speech