Australian Dollar (AUD) Slips amid Signs of Weaker Chinese Recovery
A sharp slump in coal prices kept pressure on the commodity-linked Australian Dollar (AUD) yesterday. The drop came amid fears of a slowdown in China’s economic recovery.
On the other hand, an improving market mood lent support to the risk-sensitive ‘Aussie’, limiting the currency’s losses.
This morning’s inflation figures could bolster AUD if the CPI rises as forecast. An uptick in inflation could lead to fresh Reserve Bank of Australia (RBA) rate hike bets.
New Zealand Dollar (NZD) Ticks Upwards as Risk Appetite Improves
An improvement in risk appetite underpinned the risk-sensitive New Zealand Dollar (NZD) on Tuesday.
Gains for the ‘Kiwi’ were capped by a downbeat mood in the commodity markets, however.
Today’s business confidence figures are forecast to show a modest rise in morale. Will this be enough to give NZD a lift?
Pound (GBP) Buoyed by Aggressive BoE Bets
The Pound (GBP) rose yesterday as markets priced in an aggressive policy tightening schedule from the Bank of England (BoE).
Markets are now anticipating roughly 100bps of rate hikes from the BoE by November, which would bring the UK Bank Rate up to 6%.
With no data for Sterling today, the currency may continue to be lifted by expectations of further interest rate increases.
Euro (EUR) Capped by Weakening Economic Sentiment
Expectations of additional interest rate hikes from the European Central Bank (ECB) supported the Euro (EUR) yesterday.
However, EUR was hobbled by a greater-than-forecast drop in May’s economic sentiment. The index fell to its lowest point since November 2022.
The Euro could tumble today if German data prints as forecast. May’s unemployment is set to remain at a 20-month high whilst inflation is expected to cool to 6.5%, which could dampen ECB bets.
US Dollar (USD) Loses Ground amid Debt Ceiling Hopes
A return of risk appetite knocked the safe-haven US Dollar (USD) yesterday, as news of a deal to raise the US debt ceiling alleviated market fears.
A downturn in US Treasury bond yields also dragged USD lower, although bets on another Federal Reserve rate hike cushioned the currency’s downside.
The latest JOLTs job openings figures overnight could deepen USD’s losses if they fall as forecast. Signs of slack in the labour market could dent Fed bets.
Canadian Dollar (CAD) Weakens as Oil Prices Retreat
The commodity-linked Canadian Dollar (CAD) was pulled lower by a drop in oil prices on Tuesday. CAD’s positive correlation with USD also contributed to the downside.
Looking ahead, Canada’s first-quarter GDP figures are forecast to show a return to growth. This could see the ‘Loonie’ strengthen.
May 31st 11:00 NZD ANZ Business Confidence (May) -43.4
May 31st 11:30 AUD Monthly CPI Indicator (Apr) 6.4%
May 31st 17:55 EUR German Unemployment Rate (May) 5.6%
May 31st 22:00 EUR German Inflation Rate (May) 6.5%
May 31st 22:30 EUR ECB President Lagarde Speech
May 31st 22:30 CAD GDP Growth Rate (Q1) 0.4%
Jun 1st 00:00 USD JOLTs Job Openings (Apr) 9.375m