Australian dollar (AUD) soars on China stimulus optimism
The Australian dollar (AUD) rallied yesterday as US President Donald Trump’s latest wave of tariffs swept through the market.
Despite Trump imposing a staggering 104% tariff on China, the ‘Aussie’ actually accelerated amid hopes Beijing will respond by introducing more stimulus measures to help support the Chinese economy.
Looking ahead, AUD investors will keep a close eye on China’s latest inflation figures today. If deflation persisted in March, we could see AUD exchange rates weaken.
New Zealand dollar (NZD) firms despite RBNZ rate cut
The New Zealand dollar (NZD) strengthened on Wednesday, with NZD investors shrugging off the Reserve Bank of New Zealand’s (RBNZ) latest interest rate cut and the ‘kiwi’ following the ‘Aussie’ higher.
In the absence of any notable NZD data, expect movement in the ‘kiwi’ to be tied to market risk dynamics today.
Pound (GBP) slumps amid jump in UK borrowing costs
The pound (GBP) tumbled through yesterday’s trading session amid fresh concern over the UK bond market.
Yields on 30-year government debt climbed to their highest levels since 1998, surpassing the peak seen during the UK’s bond crisis at the start of the year and making it even more challenging for the government to grow the economy while sticking to its fiscal rules.
UK economic data remains in short supply today, which could see Sterling extend its slump if UK government borrowing costs continue to rise.
Euro (EUR) rallies as Germany’s CDU and SPD reach coalition agreement
The euro (EUR) strengthened on Wednesday as it was bolstered by its negative correlation with the US dollar (USD) and German political optimism.
The latter followed the news that the centre-right Christian Democratic Union (CDU) and centre-left Social Democratic Party (SPD) reached an agreement to form a new coalition government to confront the challenges facing the Eurozone’s largest economy.
So long as investors continue to favour safe-haven assets and USD demand continues to wane, it’s likely the euro will be able to maintain its positive trajectory today.
US dollar (USD) slides amid US-China trade spat
The US dollar came under fresh selling pressure yesterday as USD investors were rattled by new tit-for-tat tariffs between the US and China.
Beijing countered Trump’s latest tariffs with an 84% tariff of its own. In addition to stoking US recession fears, the latest tariff turmoil saw US government borrowing costs climb, sapping confidence in the US dollar.
Coming up, the latest US consumer price index may infuse fresh volatility into USD exchange rates today. If inflation cools as forecast, it may tip the odds in favour of a Federal Reserve interest rate cut next month. While this would traditionally weaken the ‘greenback’, the prospect of looser monetary policy may help to temper recession bets and ultimately lift the US dollar.
Canadian dollar (CAD) firms despite plummeting oil prices
There appeared to be a decoupling of the Canadian dollar (CAD) and oil prices on Wednesday as CAD exchange rates rose, despite crude prices slumping to a new four-year low.
It remains to be seen if this decoupling persists today or if the current rout in oil prices ultimately pulls the ‘loonie’ lower again.
Data releases
22:30 USD Inflation Rate (Mar)