Australian Dollar (AUD) Firms amid Cheery Market Mood
Amid a lack of data, the Australian Dollar (AUD) firmed on Wednesday. A cautiously optimistic market mood appeared to support the risk-sensitive ‘Aussie’.
With all eyes on the Federal Reserve’s interest rate decision, optimism around an anticipated pause in rate hikes aided AUD. Additionally, iron ore prices rallied – likely adding further support for the ‘Aussie’.
Later this morning, Australia’s latest employment data is due out. Could a tight labour market boost AUD?
New Zealand Dollar (NZD) Ticks Upward amid Risk-On Trade
The New Zealand Dollar (NZD) gained some ground during Wednesday’s session, as an increased appetite for risk lifted the ‘Kiwi’.
However, recent signals from the Reserve Bank of New Zealand (RBNZ) indicating an end to their tightening cycle may have capped these gains.
Turning to today, New Zealand’s latest GDP data is expected to show that the country was in recession through Q4 2022 and Q1 2023. This could weigh heavily on NZD.
Pound (GBP) Supported by UK GDP Expansion
Following news of a 0.2% expansion in UK GDP in April, the Pound (GBP) strengthened against most peers yesterday.
However, the wider outlook remained less optimistic, which may have kept a lid on Sterling. Economists are concerned that ongoing interest rate rises from the Bank of England (BoE) could still tip the UK into recession.
A lack of data today may leave the Pound trading in narrow boundaries, but elevated BoE rate hike bets could underpin GBP.
Euro (EUR) Propped Up by Industrial Sector Recovery
A recovery in the Eurozone’s industrial sector underpinned the Euro (EUR) during Wednesday’s session. April brought a 1% increase in production, rebounding from the 3.8% contraction in March.
EUR’s gains may have been capped, however, by mixed opinions from economists, who found that new orders and demand were weakening.
Tonight, the European Central Bank (ECB) is scheduled to deliver its latest interest rate decision. While a 25bps hike is expected, hawkish forward guidance could propel the common currency.
US Dollar (USD) Weakens as US PPI Shrinks
The US Dollar (USD) fell yesterday amid a risk-on mood and expectations of a policy pause from the Federal Reserve.
This was then compounded by a larger-than-forecast cooldown in US producer price inflation last night.
Today, fallout from the Fed’s interest rate decision could continue to drive volatility in the ‘Greenback’. Later on, an expected decline in US retail sales could dent USD.
Canadian Dollar (CAD) Slides despite Oil Price Rally
The Canadian Dollar (CAD) dropped on Wednesday, as it was undermined by weakness in the US Dollar. However, a strong uptick in oil prices served to cushion the ‘Loonie’.
In the absence of any notable CAD data today, the Canadian Dollar may continue to be impacted by its close correlation with both USD and crude oil.
Data Releases
Jun 15th 08:45 NZD GDP Growth Rate (Q1) -0.1%
Jun 15th 11:30 AUD RBA Bulletin
Jun 15th 11:30 AUD Unemployment Rate 3.7%
Jun 15th 22:15 EUR ECB Interest Rate Decision 4%
Jun 15th 22:30 USD Retail Sales (May) -0.1%
Jun 15th 22:45 EUR ECB Press Conference