US Dollar slides as markets eye July Fed rate cut

Australian Dollar (AUD) rises amid bullish trade

Tuesday saw the Australian Dollar (AUD) strengthen over the session due to improving levels of risk appetite.

However, the ‘Aussie’ may have seen its gains capped by cautious meeting minutes from the Reserve Bank of Australia (RBA). The minutes showed that the RBA had entertained a 25bps interest rate hike, but elected to keep rates unchanged as inflationary pressures eased.

Australian data releases are relatively scarce today, which may prevent AUD from finding a clear trajectory.

New Zealand Dollar (NZD) lifted by cheery trade

Due to a brightening market mood, the New Zealand Dollar (NZD) managed to climb against its safer peers yesterday.

Additionally, NZD’s close ties to a stronger Australian Dollar likely yielded additional gains over the day’s trade.

The ‘Kiwi’ may see volatile trade today, as investors consider the latest PPI data.

Pound (GBP) wobbles amid unclear BoE testimony

Yesterday, the Pound (GBP) traded in a mixed capacity following the Bank of England’s (BoE) testimony to the UK Treasury Committee.

BoE Governor Andrew Bailey refused to comment on the timing of interest rate cuts, which weighed on Sterling. However, due to GBP’s increasingly risk-sensitive nature, upbeat trade provided support.

The Confederation of British Industry (CBI) releases its latest industrial trends data tonight. An improvement is expected for February’s figures, which may lift GBP exchange rates.

Euro (EUR) supported by fading ECB rate cut bets

Due to a light data calendar, the Euro (EUR) traded in a wide range on Tuesday.

However, analysis of the Eurozone’s wage data suggested that the European Central Bank (ECB) may not begin to cut rates until June. These delayed expectations served to underpin the common currency.

Data for the Euro is scarce today, which could limit the common currency’s appeal among investors.

US Dollar (USD) crumbles as markets eye July rate cut

Markets began to examine the likelihood of a July rate cut from the Federal Reserve yesterday, tanking the US Dollar (USD).

National Bank Financial (NBF) stated that recent Fed communication supports a July cut, which markets moved to price in. This, in tandem with bullish trading conditions, prompted USD to slide.

The ‘Greenback’ may see muted trade today, as markets await the Fed’s policy meeting minutes, due out tomorrow morning.

Canadian Dollar (CAD) slides as inflation cools

The Canadian Dollar (CAD) slumped on Tuesday, following cooler-than-expected inflation data for January. Headline inflation eased sharply from 3.4% to 2.9%, far lower than forecasts of 3.3%, prompting bets on coming rate cuts from the Bank of Canada (BoC).

BoC Deputy Governor Toni Gravelle is due to speak tonight. Following the recent inflation data, dovish remarks may prompt CAD to weaken further.

Data Releases

Feb 21st 21:00 GBP CBI Industrial Trends Orders (Feb)    -23

Feb 21st 23:00 USD Fed Bostic Speech

Feb 21st 23:30 CAD BoC Gravelle Speech