Australian dollar (AUD) surges as US data disappoints
The risk-sensitive Australian dollar (AUD) was initially limited on Friday as a cautiously upbeat market mood was offset by a downward revision to Australia’s services PMI.
However, the ‘Aussie’ then leapt higher in the evening after weak US jobs data boosted bets on interest rate cuts from the Federal Reserve, thereby cheering investors.
Looking ahead, an expected uptick in Australia’s monthly inflation gauge for April could lift AUD ahead of tomorrow’s Reserve Bank of Australia (RBA) policy decision. However, any movement may be muted.
New Zealand dollar (NZD) rallies as risk appetite improves
Likewise, the New Zealand dollar (NZD) shot higher on Friday evening as a pullback in Fed rate cut bets sparked a risk-on market mood.
Economic data from New Zealand is thin on the ground today. As a result, the ‘kiwi’ could be driven by market risk dynamics.
Pound (GBP) subdued despite strong PMI
The pound (GBP) struggled against its stronger peers on Friday, despite the UK’s final services PMI confirming a strong expansion in April.
Bank of England (BoE) rate cut bets may have exerted some pressure on Sterling. Although markets expect a rate cut in August, some speculated on Friday that the bank could begin loosening its policy in June.
UK markets are closed today for a bank holiday. This could leave the pound struggling to find a clear direction.
Euro (EUR) climbs amid USD selloff
The euro (EUR) gained ground on Friday thanks to its strong negative correlation with a weakening US dollar (USD).
In addition, new data showed that the Eurozone unemployment rate held at a record low in March, adding to EUR’s upside.
The Eurozone’s final services PMI is due out this evening. Confirmation of an expansion in service sector activity could boost the common currency.
US dollar (USD) plunges as payrolls misses forecasts
The US dollar slumped to multi-week lows on Friday after the latest non-farm payrolls report showed a sharper-than-expected slowdown in US jobs creation last month.
USD exchange rates managed to bounce back as investors bought the dip, despite a weaker ISM services PMI, although the ‘greenback’ still ended the day’s session lower overall.
Turning to today, American economic data is thin on the ground. Therefore, the safe-haven ‘greenback’ may trade in line with risk appetite.
Canadian dollar (CAD) falls alongside USD and oil
The Canadian dollar (CAD) fell against many of its peers on Friday as the currency was dragged lower by its correlations with both the US dollar and oil prices.
With Canadian economic data in short supply today, oil prices could drive movement in CAD.