Australian dollar (AUD) tumbles as domestic inflation slows
The Australian dollar (AUD) faced heavy selling pressure during yesterday’s session, in response to Australia’s latest monthly consumer price index.
The CPI figures reported that domestic inflation cooled in May, weakening the case for the Reserve Bank of Australia (RBA) to hike interest rates in the coming months.
Coming up, Australia will publish its latest trade data later this morning. Economists forecast Australia’s trade surplus will have shrunk again in June. Will this lead to further losses for the ‘Aussie’ today?
New Zealand dollar (NZD) underpinned by positive business confidence
The New Zealand dollar (NZD) strengthened on Wednesday, following a surprisingly strong upswing in domestic business confidence last month and an improvement in market risk appetite.
New Zealand data is in short supply today, likely tying movement in NZD to market risk dynamics.
Pound (GBP) sidelined ahead of BoE rate decision
The Bank of England’s (BoE) impending interest rate decision left the pound (GBP) to trade sideways during yesterday’s session.
While the decision was seen as being on a knife edge earlier this week, the odds of a rate cut this month has since risen to around 60%.
Unsurprisingly the spotlight today will be on the BoE’s rate decision later this evening. Expect to see the pound sink if the bank ultimately chooses to cut rates.
Euro (EUR) bolstered by shock rise in Eurozone inflation
The euro (EUR) strengthened on Wednesday as EUR investors responded positively to theEurozone’s latest inflation figures.
A shock acceleration of inflation last month was seen as weakening the odds of the European Central Bank (ECB) opting for another interest rate cut next month.
Coming up, the Eurozone will publish its latest employment data later this evening. If unemployment in the bloc remained at an all-time low in June this could help to extend the euro’s gains.
US dollar (USD) undermined by dovish Fed rate decision
The US dollar (USD) came under pressure overnight as the Federal Reserve delivered its latest interest rate decision.
While the Fed left its monetary policy untouched this month as expected, its forward guidance struck a dovish note and conceded that a September rate cut is on the cards.
The fallout from the Fed’s rate decision may continue to influence USD exchange rates through the start of today’s session. The US dollar might then face resistance later tonight if the latest ISM manufacturing PMI reports the US factory sector contracted again last month.
Canadian dollar (CAD) buoyed by rising oil prices
Soaring oil prices helped propel the commodity-linked Canadian dollar (CAD) higher on Wednesday.
In the absence of any notable domestic data, movement in the ‘loonie’ is likely to remain tied to oil price dynamics during today’s session.
Data Releases
1st Aug 11:30 AUD Balance of Trade (Jun) AU$5bn
1st Aug 19:00 EUR Unemployment Rate (Jun) -9
1st Aug 21:00 GBP BoE Interest Rate Decision 5%
2nd Aug 00:00 USD ISM Manufacturing PMI (Jul) 48.8