Australian Dollar (AUD) Weakens amid Nervous Market Mood
The Australian Dollar (AUD) headed lower yesterday as a risk-off mood continued to characterise markets, dampening the appeal of the risk-sensitive ‘Aussie’.
The gloomy sentiment came as worries about the US debt ceiling crisis rattled markets, as the deadline for a US debt default draws uncomfortably close.
Turning to today’s trade, Australia’s latest retail sales report is expected to report another rise last month. However, signs of a slowdown in the retail sector could put pressure on AUD.
New Zealand Dollar (NZD) Ticks Lower as Sentiment Sours
The New Zealand Dollar (NZD) also declined yesterday as the bearish tone undermined the riskier ‘Kiwi’.
Headwinds following the Reserve Bank of New Zealand’s (RBNZ) dovish interest rate decision on Wednesday also kept pressure on NZD exchange rates.
This morning, the ‘Kiwi’ could enjoy a boost from upbeat consumer confidence figures. Otherwise, risk sentiment may continue to drive NZD.
Pound (GBP) Firms amid BoE Bets
The Pound (GBP) climbed against many of its peers yesterday as expectations of another Bank of England (BoE) interest rate rise boosted the UK currency.
Markets bet on further policy tightening from the BoE throughout Thursday’s session, spurred on by a hotter-than-forecast inflation rate reading on Wednesday.
Looking ahead, UK retail sales this afternoon could help lift GBP exchange rates. Economists expect the latest report to show a recovery in British retail sales in April.
Euro (EUR) Slides as Germany Enters Recession
The Euro (EUR) dropped on Thursday after Germany’s latest GDP data revealed that the Eurozone’s largest economy slipped into a recession in the first quarter of 2023.
This dragged the single currency lower, although a risk-off mood saw the safer Euro recoup some losses against its riskier peers.
The focus for EUR investors today will be a speech from European Central Bank (ECB) Chief Economist Philip Lane this evening. Could Lane strike a dovish tone, thereby denting the Euro?
US Dollar (USD) Extends Rally amid Risk Aversion
The safe-haven US Dollar (USD) continued to climb yesterday, hitting new multi-month highs, as the risk-off tone intensified due to the US debt ceiling crisis.
Adding to USD’s upside, US Treasury yields extended their recent rise. The yield on the US 10-year Treasury note rose to its highest level since early March.
The latest core PCE price index – the Federal Reserve’s preferred gauge of inflation – is in the spotlight tonight. Evidence that underlying price pressures remain strong could boost Fed bets, thereby lifting USD.
Canadian Dollar (CAD) Dips in Tandem with Oil Prices
The crude-linked Canadian Dollar (CAD) lost ground yesterday as declining oil prices pressured the currency.
Amid a lack of market-moving Canadian data today, oil price dynamics could continue to drive the ‘Loonie’. If crude continues to fall, CAD could suffer further losses.
May 26th 08:00 NZD ANZ Roy Morgan Consumer Confidence (May) 81.5
May 26th 11:30 AUD Retail Sales (Apr) 0.2%
May 26th 16:00 GBP Retail Sales (Apr) 0.3%
May 26th 17:40 EUR ECB Lane Speech
May 26th 22:30 USD Durable Goods Orders (Apr) -1%
May 26th 22:30 USD Core PCE Price Index (Apr) 4.6%