Australian dollar (AUD) plunges as market mood sours
After holding strong through yesterday’s session, the Australian dollar (AUD) then plunged last night as hotter-than-forecast US inflation data soured the market mood.
As markets scaled back bets on a June interest rate cut from the Federal Reserve, anxiety that borrowing costs could stay higher for longer rattled markets.
Turning to today, the only AUD data due out are the Australian consumer inflation expectations for April. Could a decline see the ‘Aussie’ fall further?
New Zealand dollar (NZD) erases post-RBNZ gains
The New Zealand dollar (NZD) initially climbed to multi-week highs yesterday after the Reserve Bank of New Zealand (RBNZ) signalled that it would keep rates high for a ‘sustained period’.
However, the sharp deterioration in the market mood overnight brought NZD crashing down.
New Zealand economic data is thin on the ground today, which could leave the ‘Kiwi’ vulnerable to further losses if market sentiment remains downbeat.
Pound (GBP) find support amid market volatility
The pound (GBP) ticked higher against its weaker rivals yesterday, taking advantage of the market volatility in the wake of the US consumer price index.
In addition, the hot inflation figures seemed to temper bets on a Bank of England (BoE) interest rate cut in June, as the BoE may delay its cutting cycle for fear of stickier price pressures.
Today, UK economic data remains in short supply. As a result, the pound could struggle to find a clear trajectory.
Euro (EUR) pressured amid US inflation reading
Yesterday the euro (EUR) suffered from its negative correlation with a rallying US dollar (USD).
However, the safer single currency managed to gain against its riskier rivals amid the risk-negative market mood.
Looking ahead, the European Central Bank’s (ECB) policy announcement tonight is in focus. If the bank hints at looser policy from June, the euro could stumble. Meanwhile, a surprise rate cut would likely see the currency collapse.
US dollar (USD) rallies as inflation beats expectations
The US dollar surged yesterday evening after America’s latest consumer price index beat forecasts.
Both headline and core inflation came in hotter than expected, with the former jumping from 3.2% to 3.5% and the latter holding steady at 3.8%. This saw markets scale back Federal Reserve rate cut bets, thereby turbocharging USD.
Turning to today’s session, the latest US producer price inflation figures could impact USD. Could another stronger-than-forecast result see the ‘greenback’ climb even higher?
Canadian dollar (CAD) lifted by stronger USD
The Canadian dollar (CAD) strengthened yesterday as CAD was boosted by its positive correlation with the US dollar. The US inflation release overshadowed the Bank of Canada’s (BoC) interest rate decision, where the bank left interest rates on hold.
Events on the calendar for CAD thin out today, which could leave the crude-linked ‘loonie’ to be driven by oil prices.
Data releases
Apr 11th 11:00 AUD Consumer Inflation Expectations (Apr) 4.1%
Apr 11th 22:15 EUR ECB Interest Rate Decision 4.5%
Apr 11th 22:30 USD PPI (Mar) 0.3%
Apr 11th 22:30 USD Initial Jobless Claims (06/Apr) 215,000