Australian dollar (AUD) sinks amid gloomy trade
A hotter-than-forecast producer price index in Australia saw the Australian dollar (AUD) posting modest gains on Friday morning, as persistent inflationary pressures led to a slight uptick in Reserve Bank of Australia (RBA) interest rate hike bets.
However, after staging a brief recovery, the acutely risk-sensitive ‘Aussie’ tumbled against its safe-haven rivals amid a firmly downbeat spell of trade.
Coming up, China’s latest Caixin services PMI is due for release this morning, with economists forecasting improved growth in the vital sector. Due to AUD’s status as a proxy currency for the Chinese economy, increased services activity across China could bolster the ‘Aussie’.
New Zealand dollar (NZD) retreats amid risk-averse trade
The New Zealand dollar (NZD) continued to trend higher on Friday morning amid an ongoing recovery from oversold conditions earlier in the week.
However, as the latest US jobs data soured trading conditions, the ‘kiwi’ retreated in tandem with its ‘Aussie’ counterpart.
A data-light calendar in New Zealand could see NZD left vulnerable to global risk dynamics today. Could gloomy trade continue to undermine the risky ‘kiwi’?
Pound (GBP) recovers on hawkish BoE comments
The pound (GBP) continued to face headwinds for much of Friday’s session, in the wake of the Bank of England’s (BoE) decision to lower interest rates on Thursday.
However, GBP was able to recoup some of its losses overnight as the BoE’s Chief Economist Huw Pill cautioned against making further rate cuts ‘too quickly’.
This evening, the UK’s finalised services PMI is due for release. Confirmation of improving services activity in July could support GBP exchange rates.
Euro (EUR) strengthens on USD correlation
The euro (EUR) initially stumbled on Friday evening as European Central Bank (ECB) policymaker Yannis Stournaras suggested that the bloc’s economic weakness could fuel further monetary loosening.
However, due to EUR’s negative correlation with a plummeting US dollar (USD), the euro later surged against the majority of its rivals overnight.
Coming up, could a softening services PMI in the Eurozone see the single currency weaken this evening?
US dollar (USD) in freefall following jobs data
The US dollar tumbled to multi-month lows on Friday evening as the latest US non-farm payrolls printed well below forecasts.
Additionally, domestic unemployment unexpectedly rose to 4.3%. Signs of a sharp slowdown in the US labour market saw Federal Reserve interest rate cut bets surge, thereby sinking the ‘greenback’.
This evening, the ISM services PMI is due for release in the US. With the index forecast to show that service sector activity returned to growth in July, could the ‘greenback’ recoup some of its recent losses?
Canadian dollar (CAD) pressured by falling oil prices
The crude-linked Canadian dollar (CAD) stumbled on Friday amid a notable decline in oil prices. Elsewhere, CAD’s positive trading correlation with a tanking US dollar applied further pressure to the ‘loonie’.
In the absence of any notable domestic data today, oil price fluctuations could impact CAD exchange rates.
Data Releases
5th Aug 09:00 AUD Services PMI (Jul) 50.8
5th Aug 18:00 EUR Services PMI (Jul) 51.9
5th Aug 18:30 GBP Services PMI (Jul) 52.4
5th Aug 19:00 EUR PPI (Jun) 0.3%
6th Aug 00:00 USD ISM Services PMI (Jul) 51