Australian dollar (AUD) subdued amid data lull
The Australian dollar (AUD) was trapped in a narrow range on Wednesday amid a lack of macroeconomic releases.
An increasingly gloomy market sentiment kept the risk-sensitive ‘Aussie’ subdued, while falling iron ore and coal prices further hampered the commodity-driven currency. However, increased expectations that the Federal Reserve could begin to lower interest rates in September limited AUD’s losses.
This morning, Australia’s latest jobs data could drive AUD volatility, with any signs of loosening employment likely to stymie the ‘Aussie’.
New Zealand dollar (NZD) resists losses despite cooling CPI
The New Zealand dollar (NZD) initially rose on Wednesday morning, despite a cooler-than-forecast consumer price index.
Although headline inflation dipped significantly more than forecast in the second quarter of 2024, stubborn services inflation seemed to offset the downside. However, NZD did slip against its stronger rivals in the evening.
Turning to today, domestic data is in short supply. Therefore, risk appetite and Reserve Bank of New Zealand (RBNZ) policy expectations could impact NZD.
Pound (GBP) leaps amid sticky inflation
The pound (GBP) surged against a number of its rivals on Thursday afternoon as the latest UK consumer price index served to dampen bets on an August interest rate cut from the Bank of England (BoE).
UK inflation unexpectedly held at 2%, rather than easing as forecast. Meanwhile, services inflation remained uncomfortably high. This suggested that the BoE has more scope to delay rate cuts than previously thought, bolstering GBP.
Looking ahead, UK employment data is due for release this afternoon. Could signs of sticky wage growth see markets defer their BoE rate cut bets once again, thereby lifting the pound?
Euro (EUR) subdued ahead of ECB interest rate decision
The euro (EUR) traded in a wide range against its peers yesterday as markets mostly shrugged off easing Eurozone inflation.
As markets braced for the European Central Bank’s (ECB) interest rate decision, investors appeared reluctant to place any aggressive bets on the common currency.
With the central bank widely expected to leave interest rates unchanged tonight, the ECB’s forward guidance will likely be the focus for EUR investors. Any rate cut hints could drive euro volatility.
US dollar (USD) falls as Fed rate cut bets soar
The US dollar (USD) touched a fresh four-month low yesterday as surmounting Federal Reserve interest rate cut expectations weighed on the ‘greenback’.
Overnight, Fed policymaker Christopher Waller affirmed that the central bank was ‘getting closer’ to a point where it could comfortably begin to ease monetary policy. This supported market speculation that a rate cut may occur in September, thereby denting the US dollar.
Tonight, the latest US initial jobless claims figure is due for release. Should jobless claims continue to waver near a ten-month high, ongoing signs of slack in the American labour market could further pressure USD.
Canadian dollar (CAD) struggles despite rising oil prices
The crude-driven Canadian dollar (CAD) struggled to attract support on Wednesday despite an uptick in oil prices, as a weakened US dollar dragged on CAD, due to the currency pairing’s positive correlation.
Today, a lack of economic data could leave the currency vulnerable to oil price fluctuations and USD movement.
Data Releases
18th Jul 11:30 AUD Unemployment Rate (Jun) 4%
18th Jul 16:00 GBP Unemployment Rate (Jun) 4.4%
18th Jul 16:00 GBP Average Earnings (May) 5.7%
18th Jul 22:15 EUR ECB Interest Rate Decision
18th Jul 22:30 USD Initial Jobless Claims 230,000