Australian dollar (AUD) strengthens as risk appetite improves
The Australian dollar (AUD) was initially muted on Wednesday amid a cautious mood through the first half of the session.
The ‘Aussie’ then strengthened during European trading hours as widespread weakness in the US dollar (USD) bolstered market risk appetite.
Australia will publish its latest jobs report later today. Expect AUD exchange rates to slide if March’s figures point to another soft month for the labour market.
New Zealand dollar (NZD) bolstered by improving market sentiment
After initially struggling to attract support, the New Zealand dollar (NZD) rallied through the latter half of yesterday’s session amid the improvement in market risk sentiment.
Today’s focus for NZD investors will be New Zealand’s latest inflation print. Economists forecast inflation ticked higher in the first quarter. Expect the ‘kiwi’ to strengthen if investors trim their Reserve Bank of New Zealand (RBNZ) interest rate cut bets in response.
Pound (GBP) pressured by cooling inflation
The pound (GBP) trended broadly lower on Wednesday as it was undermined by weaker-than-expected domestic inflation.
The UK’s consumer price index reported headline inflation slowed from 2.8% to a three-month low of 2.6% in March, all but confirming to GBP investors that the Bank of England (BoE) will cut interest rates in May.
With the UK having exhausted its data for the week, the pound will take its cues from wider market trends today.
Euro (EUR) underpinned by USD weakness
The euro (EUR) maintained a positive trajectory through yesterday’s session, as the single currency was underpinned by its negative correlation with the US dollar.
However, the European Central Bank’s (ECB) impending interest rate decision capped the euro’s upside potential as EUR investors were reluctant to make any aggressive bets.
With a widely expected rate cut from the ECB already priced in, movement in the euro today is likely to be dictated by the bank’s forward guidance. A dovish outlook from the bank could sink the single currency.
US dollar (USD) retreats despite strong retail sales data
The US dollar came under pressure again on Wednesday as USD investors grew increasingly unnerved by the uncertainty surrounding US trade policy.
The USD selling bias remained in place despite stronger-than-expected US retail sales data, as analysts warned that March’s bump was inflated by consumers seeking to finalise their purchases before US President Donald Trump implemented his tariffs.
The US dollar may be vulnerable to further losses today, if investors continue to raise concerns over the potential impact of Trump’s tariffs on the US economy.
Canadian dollar (CAD) bolstered by BoC rate decision
The Canadian dollar (CAD) firmed yesterday as the Bank of Canada (BoC) concluded its latest policy meeting by leaving interest rates on hold, while also signalling it is in no rush to cut again until there is more clarity on how Trump’s tariffs will impact Canada’s economy.
Without any notable CAD data, movement in the ‘loonie’ may be tied to oil price dynamics today. If prices continue to rally, it may help underpin CAD exchange rates.
Data releases
08:45 NZD Inflation Rate (Q1)
11:30 AUD Unemployment Rate (Mar)
22:15 EUR ECB Interest Rate Decision
22:30 USD Initial Jobless Claims (12/Apr)