Australian Dollar (AUD) Dented by Chinese Deflation Worries
Monday saw the Australian Dollar (AUD) nosedive, owing to its nature as a Chinese proxy currency.
Headline inflation in China was found to have stagnated during June, versus the 0.2% increase forecast. This raised fears about China’s stuttering economy, which weighed on the ‘Aussie’.
This morning, the latest Westpac consumer confidence index is forecast to increase. This growing optimism could strengthen the ‘Aussie’.
New Zealand Dollar (NZD) Dips as China Proposes Export Limitations
The New Zealand Dollar (NZD) fell against many of its peers yesterday as a bearish market mood dented the risk-sensitive ‘Kiwi’.
While Chinese deflation fears rattled global investors, worries about China’s export restrictions on certain metals added to the risk-off mood.
With no data scheduled today, focus may shift to Wednesday’s Reserve Bank of New Zealand (RBNZ) decision. Will expectations of a pause dent the ‘Kiwi’?
Pound (GBP) Wobbles on Souring Market Mood
Amid a dry data calendar, the Pound (GBP) struggled to find its footing during yesterday’s session.
The market mood soured over Monday which compounded Sterling’s woes, due to its increasingly risk-sensitive nature.
After an extended dry spell, the latest employment report is due this afternoon. Low unemployment and high wage growth could boost Bank of England (BoE) bets, thereby potentially lifting the Pound.
Euro (EUR) Capped by Declining Investor Sentiment
On Monday, the Euro (EUR) benefitted from the cautious market mood, as the safer currency climbed against its peers.
However, the rally was blunted following a sharp contraction in the Eurozone Sentix investor confidence index, which fell to -22.5 on a monthly basis.
Later, the German ZEW economic sentiment index for July is due to print. Will further declines in German optimism weigh on the common currency?
US Dollar (USD) Strengthens as Investors Bet on Fed Hikes
Monday saw markets reprice the US Dollar (USD), following last Friday’s post non-farm payrolls selloff.
Bearish trade combined with a growing consensus that the Federal Reserve will push ahead with two rate hikes aided USD’s recovery.
The safe-haven ‘Greenback’ is likely to trade on risk appetite today, as the economic calendar remains light.
Canadian Dollar (CAD) Bolstered by BoC Hike Resumption Bets
The Bank of Canada (BoC) is expected to resume tightening later this week, which brought support to the Canadian Dollar (CAD) yesterday.
However, due to a lack of data, the ‘Loonie’ may trade in tandem with oil prices today. If they continue to recover, CAD could strengthen.
Data Releases
Jul 11th 10:30 AUD Westpac Consumer Confidence Change (Jul) 2.7%
Jul 11th 11:30 AUD NAB Business Confidence (Jul) -1
Jul 11th 16:00 GBP Unemployment Rate (May) 3.8%
Jul 11th 16:00 GBP Average Earnings (May) 7.1%
Jul 11th 19:00 EUR DE ZEW Economic Sentiment Index (Jul) -10.5