Australian Dollar (AUD) Slips amid Service Sector Slowdown
Wednesday saw the Australian Dollar (AUD) weaken amid confirmation of a slowing services sector.
The final Judo Bank services index printed at 50.3, below preliminary readings of 50.7. Furthermore, China’s services PMI for June also printed below forecasts, exerting pressure on the Chinese proxy currency.
Australia’s balance of trade data for May is due later this morning. Economists are anticipating a sharp drop in the trade surplus, which could weaken the ‘Aussie’.
New Zealand Dollar (NZD) Muted amid Bearish Trade
Yesterday, the New Zealand Dollar (NZD) saw a lack of directional trade, as a slight data calendar capped movement.
Furthermore, Sino-American trade tensions may have created headwinds for the risk-sensitive ‘Kiwi’ by contributing to a sombre market mood.
With no data scheduled today, the New Zealand Dollar will likely be exposed to market dynamics. If the mood brightens, this could strengthen NZD.
Pound (GBP) Mixed amid BoE Hike Bets
Bets on further tightening from the Bank of England (BoE) lent the Pound (GBP) some support yesterday, as markets bet on the possibility of a 50bps hike.
However, these gains were firmly limited by persistent anxieties around overtightening. Investors fear that rising interest rates could trigger a UK recession, and this stifled sentiment towards Sterling.
Owing to another blank data slate, the Pound could be vulnerable to shifts in risk appetite during today’s trade.
Euro (EUR) Undermined by Softening Service Sector
Bearish trade allowed the Euro (EUR) to gain ground against riskier assets yesterday, despite worrying economic data.
The final reading for the bloc’s services index fell lower than preliminary readings, amplifying recession worries. This undermined EUR’s upside potential.
This afternoon, May’s German factory orders data is scheduled to print. A 1.2% recovery is forecast, which could prompt tailwinds for the single currency.
US Dollar (USD) Capped by Factory Orders Miss
The US Dollar (USD) saw its gains restricted last night by underwhelming growth in US factory orders.
Orders over May came in below forecasts, printing at 0.3% as opposed to 0.8%. However, the sour market mood brought safe-haven flows to USD, keeping it aloft.
Turning to today’s session, the ‘Greenback’ could endure volatility as markets digest the Federal Reserve’s meeting minutes. Overnight, an expected recovery in service sector activity could boost USD.
Canadian Dollar (CAD) Stumbles amid Dovish BoC Perception
Yesterday, perceptions that the Bank of Canada (BoC) was nearing the end of its tightening cycle dented the Canadian Dollar (CAD).
This evening, the latest balance of trade data could weaken the ‘Loonie’, if the sharp drop forecast for May’s trade surplus prints true.
Data Releases
Jul 6th 11:30 AUD Balance of Trade (May) AU$10.5bn
Jul 6th 16:00 EUR DE Factory Orders (May) 1.2%
Jul 6th 19:00 EUR Retail Sales (May) 0.2%
Jul 6th 22:15 USD ADP Employment Change (Jun) 228,000
Jul 6th 22:30 USD Initial Jobless Claims (01/Jul) 245,000
Jul 6th 22:30 CAD Balance of Trade (May) CA$1.15bn
Jul 7th 00:00 USD ISM Services PMI (Jun) 51