Australian Dollar (AUD) Ticks Higher amid Risk-On Mood
A return of global risk appetite saw the risk-sensitive Australian Dollar (AUD) firm on Friday as markets grew cautiously optimistic that the US debt ceiling crisis would be resolved.
AUD’s gains were capped by a sharp downturn in iron ore, however, along with disappointing retail sales data.
Looking to today, the ‘Aussie’ could come under additional pressure if iron ore prices continue to decline. Could a cheery market mood help to offset any downside?
New Zealand Dollar’s (NZD) Gains Limited as Consumer Confidence Idles
The risk-sensitive New Zealand Dollar (NZD) found some support at the end of last week as risk appetite improved.
May’s consumer confidence figures undermined the ‘Kiwi’, however, stifling the currency’s potential. Morale edged marginally lower in May amid persistent inflationary pressures.
A lack of data for NZD today may leave the currency vulnerable to shifts in risk appetite.
Pound (GBP) Boosted by Upbeat Retail Data
Above-forecast retail sales figures on Friday buoyed the Pound (GBP). April’s sales growth printed at 0.5%, versus forecasts of a 0.3% increase, despite the ongoing squeeze on consumer spending.
Forecasts of additional policy tightening from the Bank of England (BoE) lent extra support to GBP. Markets are pricing in multiple further rate hikes following April’s hot inflation print.
This week brings a lull in notable UK economic data, which could limit GBP movement.
Euro (EUR) Loses Ground amid Dovish ECB Comments
The Euro (EUR) weakened on Friday amid a positive risk tone. Cautious signals from European Central Bank (ECB) Chief Economist Philip Lane also contributed to EUR’s downturn.
Additionally, evidence earlier in the week that Germany fell into a technical recession at the end of 2022 maintained pressure on the single currency.
Economic sentiment figures this evening could knock confidence in the Euro if they edge lower as expected.
US Dollar (USD) Rallies after Core PCE Uptick
The safe-haven US Dollar (USD) initially came under pressure on Friday as a bullish tone in markets sapped USD’s appeal.
However, the ‘Greenback’ was able to recoup some of its losses. A rise in the core PCE price index – the Federal Reserve’s preferred measure of inflation – prompted fresh Fed rate hike bets. This strengthened USD.
Looking ahead, a forecast drop in consumer confidence later tonight could pull USD lower.
Canadian Dollar (CAD) Regains Ground as Oil Rises
The commodity-tied Canadian Dollar (CAD) saw mixed movement on Friday. CAD initially slipped due to its positive correlation with the ‘Greenback’ but bounced back amid stronger oil prices and USD’s recovery.
Canadian economic data is thin on the ground today. As a result, CAD’s trading relationships with USD and oil could continue to drive movement in the currency.
May 30th 19:00 EUR Economic Sentiment (May) 98.9
May 31st 00:00 USD CB Consumer Confidence (May) 100
May 31st 00:30 USD Dallas Fed Manufacturing Index (May) -25