Australian dollar (AUD) firms following RBA minutes
The Australian dollar (AUD) rose yesterday as the Reserve Bank of Australia’s (RBA) meeting minutes indicated policymakers are hesitant to signal additional interest rate cuts at this stage.
A risk-on market mood also lifted AUD, amid signs that Donald Trump may slightly soften his approach by applying reduced tariffs on Chinese electronics and delaying charges on imported car parts.
With Australian data absent from the calendar today, risk appetite could drive AUD. If the mood remains risk-on, the ‘Aussie’ could climb.
New Zealand dollar (NZD) buoyed by upbeat mood
The New Zealand dollar (NZD) gained ground yesterday as the upbeat market mood boosted demand for the risk-sensitive ‘kiwi’.
Aside from the New Zealand trade data published earlier this morning, risk appetite may drive NZD during today’s session.
Pound (GBP) firms on UK-US trade deal hopes
The pound (GBP) rose against its safer rivals yesterday thanks to the risk-on mood and optimism around a UK-US trade deal.
However, GBP’s upside potential was capped by cooler-than-forecast wage growth figures, as they increased bets on an interest rate cut from the Bank of England (BoE) in May.
Attention now turns to the UK’s consumer price index due out this afternoon. Could cooling inflation further fuel BoE rate cut bets and pile pressure on the pound?
Euro (EUR) falls following dire German data
The euro (EUR) was placed on the defensive yesterday after an abysmal reading from Germany’s latest economic sentiment index.
Economic morale plummeted from 51.6 in March to -14 in April, far below forecasts of 9.5, as anxiety around global trade tensions rocked confidence among manufacturers in the Eurozone’s largest economy.
The Eurozone’s final inflation rate reading for March is due out later today. Confirmation of a cooldown could dent EUR ahead of the European Central Bank’s (ECB) interest rate decision.
US dollar (USD) mixed as Trump hints at softer tariff stance
The US dollar (USD) was mixed on Tuesday, with the safe-haven currency falling against its riskier rivals but managing to edge higher elsewhere.
USD seemed to draw support from Trump’s slightly softer approach to tariffs, along with news that more companies were increasing investment in US-based production in order to avoid tariffs.
Turning to today, the ‘greenback’ could enjoy more success as US retail sales are expected to have jumped higher in March.
Canadian dollar (CAD) slips as inflation eases
The Canadian dollar (CAD) stumbled yesterday as Canadian inflation unexpectedly cooled in March, stoking bets on the possibility of more Bank of Canada (BoC) rate cuts in the future.
Looking forward, the BoC’s interest rate decision is in focus. Although no change is expected, yesterday’s inflation figures could see policymakers strike a more dovish tone, which may dent CAD.
Data releases
08:45 NZD Balance of Trade (Mar)
16:00 GBP Inflation Rate (Mar)
19:00 EUR Inflation Rate (Mar)
22:30 USD Retail Sales (Mar)
23:45 CAD BoC Interest Rate Decision