Australian dollar (AUD) strengthens amid positive risk sentiment
The Australian dollar strengthened yesterday after positive risk tones in the market. Despite weaker than forecast Trade balance figures, the ‘Aussie’ held firm overnight and is sitting at more than five-month highs against the US dollar.
With a generally quiet economic day today, the AUD will take movement from general risk sentiment, as well as the all-important US employment figures out tonight.
Next week will see the release of the latest Business and Consumer sentiment figures.
US dollar (USD) edges lower ahead of key data
The US dollar edged slightly lower overnight in a relatively quiet session, while the US equity and bond markets were closed for the Independence Day public holiday.
Tonight’s non-farm payrolls could be crucial for USD movements, and for the path of US interest rates moving forward.
Looking ahead, next week will see the release of the latest inflation figures.
New Zealand dollar (NZD) stable during quiet economic session
The NZ Dollar remained relatively flat during quiet economic session. The Food Price Index (FPI) monthly release showed a cooling in food prices, potentially adding to the case for a New Zealand rate cut later this year.
Today’s manufacturing index will be closely watched to gauge the relative strength of the economy, as seen from the manufacturing industry.
Next week will see the latest cash rate announcement from the Reserve bank, potentially causing some volatility for the Kiwi.
Pound (GBP) edges slightly higher amid UK election
The Pound traded slightly higher overnight, as the UK head to the election polls. Early polls suggest a landslide Labour victory, with Labour securing a majority government with 410 out of 610 seats, ending 14 years of Conservative rule. The official announcement will be made today, potentially causing some movement in the Pound.
The Labour government aims to reduce the UK’s large budget deficit and proposes closer alignment with the EU in trade, which is a positive for the UK economy. The market will however closely monitor any changes made by the new government and the implementation of any new policies.
Looking forward, next week will see the release of the latest GDP figures for the UK, giving clearer direction of the state of the UK economy.
The Euro (EUR) strengthens as French Election nears
The Euro strengthened overnight after stronger than forecast PMI figures out of a number of EU member states. The ECB Monetary Policy Meeting Accounts also released, showed there was a degree of caution behind the decision to cut interest rates by 25bp in June, which is consistent with the likelihood of the ECB cutting rates slowly moving forward.
The French polls have resumed ahead of the final round of voting this Sunday. Early polls suggest a far-right National Rally (NR) win, but will fall short of forming a majority government.
The EUR may see volatility as the market deciphers the election results and its implications on one of the largest countries in the EU, and the path for the rest of the Eurozone moving forward.
Data Releases
5th Jul 16:00 EUR German Industrial Production m/m
5th Jul 16:45 EUR French Industrial Production m/m
5th Jul 20:30 CAD Unemployment Rate
5th Jul 20:30 USD Non-Farm Employment Change