Australian Dollar (AUD) Falls amid Brittle Chinese Recovery
Monday saw the Australian Dollar (AUD) weaken against safer peers, as disappointing GDP data from China soured the market mood.
While still above previous readings, China’s GDP growth rate for Q2 came in at 6.3% – far below expectations of 7.3% growth. Analysts saw this as signs of faltering recovery, which dented the China-proxy Australian Dollar.
This morning, the Reserve Bank of Australia (RBA) is set to publish its latest meeting minutes. If they strike a hawkish tone, AUD could rally.
New Zealand Dollar (NZD) Slides amid Souring Market Mood
The impact of yesterday’s risk-off trade extended to the New Zealand Dollar (NZD) too, as it lost out against most peers.
China’s bleak economic outlook likely contributed further losses, due to the country’s close trade links to New Zealand.
Over today’s session, the ‘Kiwi’ may trade quietly as investors look ahead to tomorrow’s consumer price index data.
Pound (GBP) Cushioned by BoE Rate Rise Bets
Elevated Bank of England (BoE) rate hike bets cushioned the Pound (GBP) on Monday, allowing it to stay afloat during the risk-off trade.
Investors are anticipating upwards of 140bps of additional tightening to come, which has served to benefit Sterling during lighter calendar days.
Similarly to the ‘Kiwi’, GBP investors are likely to shift focus towards Wednesday’s inflation data, likely prompting quiet trade for the Pound today.
Euro (EUR) Mixed amid Light Data Calendar
Mixed trade struck the Euro (EUR) on Monday, as a lack of data drivers prevented the common currency from strengthening.
Some small gains came from the currency’s negative correlation to the US Dollar (USD), which saw choppy trade. Bets that the European Central Bank (ECB) will continue tightening in the future likely also served to buoy EUR.
Due to a continued absence of Eurozone economic data, the common currency may struggle for directional trade during today’s session.
US Dollar (USD) Choppy amid Diminished Fed Hike Bets
Wavering trade clouded the US Dollar during Monday’s session, as the safe-haven ‘Greenback’ was unable to press its advantage.
While a 25bps hike is priced in for July, the growing consensus that the Federal Reserve is near the end of its current tightening cycle remained a strong headwind.
Later tonight, US retail sales data for June is set for publication. If it rises as forecast, the ‘Greenback’ could strengthen.
Canadian Dollar (CAD) Rises despite Oil Price Slump
Despite a sharp decline in oil prices, the Canadian Dollar (CAD) managed to strengthen against its peers on Monday.
Tonight, the ‘Loonie’ may weaken if June’s inflation data shows a cooldown, as forecast.
Data Releases
Jul 18th 11:30 AUD RBA Meeting Minutes
Jul 18th 22:30 CAD Inflation Rate (Jun) 3%
Jul 18th 22:30 USD Retail Sales (Jun) 0.5%