Australian dollar (AUD) stifled by souring market mood
The Australian dollar (AUD) wavered overall yesterday, initially rising after new data showed an unexpected improvement in domestic consumer confidence in June.
However, the risk-sensitive ‘Aussie’ was undermined by a decline in risk appetite as the session progressed.
Australia’s latest monthly CPI indicator is due this morning. Inflation is expected to have accelerated in May, which could boost the ‘Aussie’ by increasing Reserve Bank of Australia (RBA) interest rate hike bets.
New Zealand dollar (NZD) muted amid lack of data
Minimal data and mixed trading conditions prompted the New Zealand dollar (NZD) to initially trade sideways yesterday.
As the session progressed and sentiment soured, the risk-sensitive ‘kiwi’ slipped against its stronger peers.
New Zealand data looks set to remain thin on the ground today, which could result in another day of subdued trade for NZD.
Pound (GBP) firms despite absence of data
The pound (GBP) managed to rise against its weaker rivals yesterday, although a lack of UK economic data kept a firm lid on the currency.
Supporting the pound may have been some uncertainty over when the Bank of England (BoE) may cut interest rates. With early signs that global inflation is on the rise again, the BoE may opt to postpone cutting rates.
The Confederation of British Industry (CBI) is set to publish its latest distributive trades data today. If retail sales softened in June as forecast, GBP may weaken.
Euro (EUR) undermined by continued French political worries
Yesterday, the euro (EUR) softened against most of its peers due to a lack of domestic data points.
Furthermore, continued anxieties over the upcoming French election may have contributed further pressure. Markets are concerned that a loss for the leading centrist party could bring political turbulence in the Eurozone’s second-largest economy.
Turning to today, a reduction in German consumer pessimism could provide some support to the common currency.
US dollar (USD) supported by hawkish Fed rhetoric
Tuesday saw the US dollar (USD) strengthen against many of its peers following a hawkish speech from Federal Reserve official Michelle Bowman.
Bowman stated that the Fed was still open to raising interest rates if inflation proves persistent. As this prompted adjustments to Fed rate cut bets, it allowed USD to shrug off a downtick in US consumer confidence.
With US data releases set to dry up today, the ‘greenback’ may trade in a narrow range.
Canadian dollar (CAD) underpinned by inflation acceleration
Yesterday, the Canadian dollar (CAD) was kept afloat by hotter-than-forecast inflation, which unexpectedly accelerated from 2.7% in April to 2.9% in May.
Owing to a lull in data, the crude-sensitive ‘loonie’ may trade in tandem with oil prices today. If prices fall, CAD may struggle to attract support.
Data releases
Jun 26th 09:35 AUD RBA Kent Speech
Jun 26th 11:30 AUD Monthly CPI Indicator (May) 3.8%
Jun 26th 16:00 EUR German GfK Consumer Confidence (Jul) -18.9
Jun 26th 20:00 GBP CBI Distributive Trades (Jun) 1
Jun 26th 20:40 EUR ECB Lane Speech