Australian dollar (AUD) fluctuates amid mixed market mood
The Australian dollar (AUD) initially firmed yesterday, with the currency being made more attractive by reports that US-China trade talks will get underway by the end of the week.
However, these gains were swiftly reversed as India’s missile attack on Pakistan and Pakistan-administrated Kashmir soured market sentiment.
Turning to today’s session, the release of China’s latest trade data could apply additional pressure to the ‘Aussie’ if April’s figures report another fall in imports.
New Zealand dollar (NZD) undermined by risk-off flows
The New Zealand dollar (NZD) also fluctuated on Wednesday, with the gains that followed a stronger-than-expected domestic jobs report being swiftly erased as market risk appetite soured.
Expect the ‘kiwi’ to remain on the defensive today if market risk sentiment remains downbeat.
Pound (GBP) flat in advance of BoE rate decision
The pound (GBP) traded sideways through yesterday’s session, with GBP investors reluctant to alter their positions ahead of the Bank of England’s (BoE) impending interest rate decision.
Sterling was also subdued as markets digested the potential economic implications of the UK’s new trade deal with India.
Unsurprisingly the focus will be on the BoE today. While a 25bps rate cut is largely priced in, the pound may soften if policymakers signal more cuts will follow in the second half of the year.
Euro (EUR) firms on positive German factory data
The euro (EUR) ticked broadly higher on Wednesday, following the release of Germany’s latest factory orders data.
March’s figures reported a much stronger-than-expected rebound in order growth, helping to feed recent optimism over the Eurozone’s largest economy.
The euro may build on these gains later today, if we see a similar improvement in Germany’s industrial production release.
US dollar (USD) rebalances following Fed rate decision
The US dollar (USD) was rangebound through most of yesterday’s session as markets braced for the Federal Reserve’s latest interest rate decision.
While the Fed ultimately left its monetary policy untouched, USD exchange rates weakened initially however rebalanced towards to close of trading. Fed Chair Powell decided to keep rates on hold and suggested uncertainly around inflation and trade tariffs factored their decision
Canadian dollar (CAD) slips as oil prices stall
The Canadian dollar (CAD) ticked lower on Wednesday as the recent recovery in oil prices appeared to peter out.
In the absence of any notable CAD data, it’s likely movement in the ‘loonie’ will continue to be influenced by oil price dynamics today.
Data releases
16:00 EUR German Industrial Production (Mar)
21:00 GBP BoE Interest Rate Decision
22:30 USD Initial Jobless Claims (3/May)