Australian dollar (AUD) climbs following budget announcement
The Australian dollar (AUD) strengthened yesterday as markets responded to the unveiling of Australia’s federal budget.
Ratings agencies said that the budget could sightly fuel inflation, which may mean the Reserve Bank of Australia (RBA) leaves interest rates higher for longer.
This morning, it’s all eyes on Australia’s latest jobs report. Could a rise in domestic unemployment last month see the ‘Aussie’ trim yesterday’s gains?
New Zealand dollar (NZD) rises as risk appetite improves
The New Zealand dollar (NZD) also gained ground yesterday, with the ‘kiwi’ enjoying its positive correlation with the Australian dollar.
In addition, an improving market mood further boosted the risk-sensitive currency’s appeal.
Domestic New Zealand data is absent from the calendar again today. This could leave NZD to once again trade in relation to AUD and market risk dynamics.
Pound (GBP) buoyed by risk-positive trade
The pound (GBP) rose against its safer peers yesterday as a bullish market impulse boosted the increasingly risk-sensitive UK currency.
One factor cheering markets was the latest US inflation figures, which showed a cooldown in April and fuelled bets on coming Federal Reserve interest rate cuts.
With market-moving UK data thin on the ground today, risk sentiment could drive GBP movement once more.
Euro (EUR) mixed despite upbeat data
The euro (EUR) traded without a clear direction yesterday, although some upbeat Eurozone economic data lent EUR modest support during the European trading hours.
Industrial production in bloc grew more than forecast in March, while the second estimate for GDP growth in the first quarter of 2024 confirmed a decent expansion.
Eurozone data releases thin out today. This could leave the euro to trade in a wide range during the session ahead.
US dollar (USD) slumps as US inflation declines
The US dollar (USD) slumped to a one-month low yesterday evening, after cooling US inflation in April boosted Federal Reserve rate cut bets.
This was compounded by weaker-than-forecast American retail data, as domestic sales in the US unexpectedly stalled in April.
Turning to today, the latest US initial jobless claims data is the focus for USD investors. After last week’s higher-than-forecast figure, any signs that the US labour market is cooling could hurt the ‘greenback’.
Canadian dollar (CAD) falls alongside oil and USD
The commodity-linked Canadian dollar (CAD) weakened yesterday as falling oil prices and a declining US dollar both weighed on the ‘loonie’.
Crude prices and USD movement could continue to drive CAD exchange rates today, amid a lack of Canadian economic data.
Data Releases
May 16th 11:30 AUD Unemployment Rate (Apr)
May 16th 22:30 USD Initial Jobless Claims (11/May)
May 16th 23:15 USD Industrial Production (Apr)