Australian dollar (AUD) climbs as PPI beats expectations
The Australian dollar (AUD) strengthened on Friday after the latest producer price index exceeded forecasts.
Wholesale inflation rose 0.9% in the first quarter of this year, matching the previous quarter’s growth and beating forecasts of a slowdown to 0.6%. This fuelled bets that the Reserve Bank of Australia (RBA) will keep interest rates higher for longer, thereby boosting AUD.
Today, with Australian economic data in short supply, market risk dynamics could influence the ‘Aussie’.
New Zealand dollar (NZD) buoyed by AUD correlation
The New Zealand dollar (NZD) also firmed on Friday, with the ‘kiwi’ enjoying its positive correlation to the ‘Aussie’.
However, an unexpected decline in New Zealand consumer confidence stifled NZD’s potential, and the currency later relinquished its gains.
Turning to the session ahead, market sentiment may be the driving factor behind NZD movement due to a lack of domestic data.
Pound (GBP) wobbles in absence of data
The pound (GBP) wavered at the end of last week as a lack of UK economic data left Sterling struggling to find a clear direction.
Meanwhile, ongoing speculation over when the Bank of England (BoE) could start cutting interest rates may also have contributed to the pound’s mixed movement.
British data remains thin on the ground today, which may leave the pound wavering once again.
Euro (EUR) weakens amid ECB rate cut bets
The euro (EUR) fell across the board at the end of last week’s session amid ongoing bets that the European Central Bank (ECB) will be one of the first major banks to start cutting interest rates.
In addition, EUR’s strong negative correlation with the US dollar (USD) applied some pressure to the currency.
Tonight, Germany’s latest consumer price index is due out. Could an uptick in German inflation lend EUR some support?
US dollar (USD) recovers as inflation beats forecasts
After a rather bruising week, the US dollar managed to regain ground on Friday thanks to a hotter-than-forecast core PCE price index.
The Federal Reserve’s preferred measure of inflation held steady at 2.8% in March, rather than easing to 2.6% as expected. This reignited the recent pullback in Fed rate cut bets, thereby boosting USD.
American data is absent from the calendar today. As a result, risk sentiment could drive the safe-haven currency.
Canadian dollar (CAD) underpinned by stronger USD
The Canadian dollar (CAD) found support during Friday’s American trading hours, thanks to CAD’s positive correlation with the recovering US dollar.
Today, oil prices could impact the crude-linked ‘loonie’. If prices decline, CAD could follow suit.