Australian dollar (AUD) rebounds amid upbeat trade
The Australian dollar (AUD) initially fell on Friday as dovish comments from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser continued to pressure the currency.
However, in the evening confirmation that US inflation cooled in May saw a cheery market sentiment lift the acutely risk-sensitive ‘Aussie’.
Looking ahead, China’s latest Caixin manufacturing PMI is due for release this morning. A forecast softening in Chinese factory activity may hamper AUD, due to its status as a proxy currency for the Chinese economy.
New Zealand dollar (NZD) ticks up amid risk-on mood
Due to a data-light calendar, the New Zealand dollar (NZD) moved largely in tandem with its ‘Aussie’ counterpart on Friday due to the currency pairing’s positive correlation.
A quiet start to the week could see the risky ‘kiwi’ driven primarily by market risk dynamics today.
Pound (GBP) struggles despite upbeat GDP print
The pound (GBP) failed to attract support on Friday despite an upward revision to the UK’s final GDP reading.
The overnight release surpassed previous estimates, showing 0.7% growth for the first quarter rather than 0.6%. However, Sterling was nevertheless subdued, slipping against its stronger peers.
This evening the UK’s finalised manufacturing PMI is due for release. Confirmation of further recovery in the British manufacturing sector could lend GBP modest support.
Euro (EUR) pressured by loosening German labour market
At the end of last week, the euro (EUR) struggled to attract investor interest following news that German unemployment unexpectedly rose to a fresh three-year high in June.
Meanwhile, investors remained largely hesitant to place any aggressive bets on the common currency ahead of France’s first round of legislative elections, which took place on Sunday.
This evening, Germany’s latest inflation data is due for release. Could further inflationary easing in the Eurozone’s largest economy weigh on EUR exchange rates?
US dollar (USD) wavers amid cooling price pressures
After initially firming on Friday, the US dollar (USD) then stumbled in the evening following the release of the latest core PCE price index.
The Federal Reserve’s preferred gauge of inflation eased as forecast to 2.6% in May, falling to its lowest level since March 2021. Talk of potential interest rate cuts in the third quarter dampened USD’s appeal.
Tonight, the latest ISM manufacturing PMI is in focus. Should the index rise as forecast in June, USD may post modest gains.
Canadian dollar (CAD) undermined by easing oil prices
On Friday, the crude-linked Canadian dollar (CAD) struggled to edge higher following a slight decrease in oil prices. However, rising Canadian GDP offset the downside.
A lack of fresh Canadian data today could see the ‘loonie’ trade without a clear direction against its peers.
Data releases
Jul 1st 18:30 GBP Manufacturing PMI (Jun) 51.4
Jul 1st 20:00 EUR German Inflation Rate (Jun) 2.3%
Jul 2nd 00:00 USD ISM Manufacturing PMI (Jun) 49