Australian Dollar (AUD) Crumbles on Dovish RBA Decision
The Australian Dollar (AUD) plummeted on Tuesday in the wake of the Reserve Bank of Australia’s (RBA) latest interest rate decision.
The RBA opted to leave its monetary policy untouched this morning. Disappointing those AUD investors who had been betting on a 25bps rate hike. The RBA’s dovish forward guidance further undermined the ‘Aussie’.
In the absence of any notable domestic data, AUD investors will be left to digest the RBA decision, and the wider market sentiment could impact the Australian Dollar.
New Zealand Dollar (NZD) Soured by Downbeat China Data
The New Zealand Dollar (NZD) stumbled yesterday as a souring market mood saw investors shun the risk-sensitive ‘Kiwi’.
This followed the publication of the latest manufacturing PMI from China, which further showcased the country’s stuttering post-Covid recovery.
Looking ahead, New Zealand’s latest jobs report could send the ‘Kiwi’ lower if forecasts prove accurate, as economists forecast a rise in unemployment in the second quarter.
Pound (GBP) Dented by UK Recession Jitters
The Pound (GBP) trended broadly lower overnight on Tuesday as GBP investors grew increasingly concerned by the prospect of a UK recession.
These concerns were seen as all but erasing any chance for a 50bps interest rate hike from the Bank of England (BoE) later this week.
Turning to today, any movement in the Pound may be limited as GBP investors brace for the BoE’s latest interest rate decision on Thursday.
Euro (EUR) Supported by Tight Labour Market
The Euro (EUR) found moderate support yesterday in the wake of a surprisingly upbeat jobs report. June’s figures reported unemployment held firm at a downwardly revised 6.4%.
A tight labour market could allow the European Central Bank (ECB) more breathing room when it comes to further raising the interest rates, keeping the Euro propped up.
Turning to today, a quiet trading calendar could see the Euro exposed to market moods and its negative correlation with the US Dollar (USD).
US Dollar (USD) Buoyed by Risk-Off Flows
The US Dollar firmed on Tuesday, as a cautious market mood saw skittish investors favour the safe-haven currency.
The ‘Greenback’ then maintained these gains on the back of some underwhelming US data, as concerns over the trajectory of the US economy further undermined risk sentiment.
Later tonight the US will publish its latest ADP employment report. Could a sharp drop in the number of jobs being added by the US economy lead the US Dollar to relinquish some of its recent gains?
Canadian Dollar (CAD) Supported by Recovering Oil Prices
The Canadian Dollar (CAD) held onto modest gains yesterday as oil prices stabilised above $80 a barrel for the first time in over three months. Further lending support to the ‘Loonie’ was a better-than-expected manufacturing PMI.
Looking ahead, a lack of economic data will leave the commodity-linked ‘Loonie’ susceptible to market moods and oil price dynamics.
Data Releases
Aug 2nd 08:45 NZD Unemployment Rate (Q2) 3.5%
Aug 2nd 11:30 AUD RBA Chart Pack
Aug 2nd 22:30 USD ADP Employment Change 189,000