Australian dollar (AUD) lifted by hotter-than-forecast inflation
Monday saw Australia’s latest TD-MI inflation gauge print above forecasts, which strengthened the Australian dollar (AUD).
In May, inflation increased by 0.3%, above expectations of a 0.2% rise. This, alongside a cheery market mood, supported AUD by prompting pared-back Reserve Bank of Australia (RBA) interest rate cut bets.
Looking ahead, new data is set to show a decline in Australian corporate profits in the first quarter of 2024. This could dent AUD.
New Zealand dollar (NZD) rises amid upbeat trade
Although domestic data was scarce yesterday, the New Zealand dollar (NZD) managed to rise against its peers.
Due to a bullish market impulse, the risk-sensitive ‘kiwi’ leapt higher against most major peers as investors sought riskier assets.
NZD may struggle to find its footing today, due to an absence of New Zealand data releases.
Pound (GBP) unmoved by confirmation of manufacturing growth
Despite risk-on trade and confirmation of expansion in the UK manufacturing sector, the pound (GBP) failed to find support on Monday.
Sterling may have been undermined by reports that UK input costs are easing, which could feed through to cooler inflation. This may have sparked increased Bank of England (BoE) interest rate cut bets for August, flattening the pound.
Turning to today, the latest retail sales monitor from the British Retail Consortium (BRC) is expected to show an increase in sales in May. However, its impact on the pound may be limited in scope.
Euro (EUR) mixed amid upbeat mood
Monday saw the euro (EUR) trade in a mixed capacity, due to a steady increase in risk appetite.
As a safer currency, EUR lost out against riskier peers. However, its negative correlation to a weakening US dollar (USD) allowed it to find some support.
This evening, Germany’s unemployment rate could dent EUR if it holds at its highest level since May 2021. However, movement may be limited ahead of the European Central Bank’s (ECB) policy decision later in the week.
US dollar (USD) slides as manufacturing activity worsens
The start of the week saw the US dollar slip against its rivals, in the wake of a shock fall in the ISM manufacturing PMI.
In May, factory activity fell further into contraction territory, with the index falling from April’s reading of 49.2 to 48.7. Additionally, cheery trade further sapped the safe-haven currency’s appeal.
Tonight, the ‘greenback’ may continue to fall in the wake of the latest JOLTs job openings data. With openings forecast to have fallen in April, signs of slack in the US labour market could undercut USD.
Canadian dollar (CAD) dented by downbeat manufacturing data
Yesterday, a surprise fall in Canada’s manufacturing PMI for May weakened the Canadian dollar (CAD).
Oil prices may be the primary driver of movement for the crude-linked ‘loonie’ today. If prices rise, CAD may follow suit.
Data releases
Jun 4th 09:01 GBP BRC Retail Sales Monitor (May) 1.2%
Jun 4th 11:30 AUD Company Gross Profits (Q1) -0.9%
Jun 4th 17:55 EUR German Unemployment Rate (May) 5.9%
Jun 5th 00:00 USD JOLTs Job Openings (Apr) 8.34m