Australian dollar (AUD) underpinned by hawkish RBA minutes
Tuesday saw the Australian dollar (AUD) firm following hawkish minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting.
The minutes showed that the RBA considered hiking interest rates last month. As it suggests a tightening bias may still linger, the ‘Aussie’ was able to shrug off downbeat consumer confidence data.
With macroeconomic releases tapering off today, AUD exchange rates could see little movement.
New Zealand dollar (NZD) listless as markets await RBNZ decision
The New Zealand dollar (NZD) was static yesterday as investors braced for today’s interest rate decision.
The Reserve Bank of New Zealand (RBNZ) is expected to keep rates unchanged, and emphasise the need for restrictive policy. As investors awaited the decision, NZD remained sidelined.
The ‘kiwi’ is likely to be rocked by the decision today. Could dovish forward guidance weaken the New Zealand dollar?
Pound (GBP) undermined by cooling inflationary pressures
On Tuesday, the pound (GBP) wavered in the wake of reports that UK grocery inflation fell to its lowest levels in over three years.
Kantar found that price growth cooled to 2.4%, setting the stage for UK inflation to decelerate rapidly in the coming months.
If the UK’s headline inflation rate reached 2.1% in April as expected, the pound may slump today as it likely cements bets for a June rate cut from the Bank of England (BoE).
Euro (EUR) softens as German PPI decelerates
Cooling German producer price inflation pressured the euro (EUR) during Tuesday’s session, limiting its appeal.
As PPI often filters through to consumer inflation, news that it was cooling beyond expectations amplified bets on a June rate cut from the European Central Bank (ECB).
Today, the euro may see additional choppy trade as markets await a speech from ECB President Christine Lagarde.
US dollar (USD) rudderless amid lack of data
The US dollar (USD) traded in a narrow range yesterday, owing to an absence of impactful data releases.
Hawkish comments from Federal Reserve official Raphael Bostic may have kept USD underpinned, however. In a speech, Bostic commented that he didn’t see the need for interest rate cuts just yet, as the Fed awaits fresh inflation data.
With data releases in short supply today, trade in the ‘greenback’ may remain directionless.
Canadian dollar (CAD) stumbles as inflation cools
Yesterday, the Canadian dollar (CAD) weakened as domestic data reported a cooling of inflation last month, which sparked bets on interest rate cuts from the Bank of Canada (BoC).
Turning to today’s session, the ‘loonie’ may consolidate its post-inflation losses amid a light data calendar.
Data releases
May 22nd 12:00 NZD RBNZ Interest Rate Decision 5.5%
May 22nd 16:00 GBP Inflation Rate (Apr) 2.1%
May 22nd 18:05 EUR ECB President Christine Lagarde Speech