Australian dollar (AUD) volatile amid shifting market mood
The Australian dollar (AUD) fluctuated yesterday, with the ‘Aussie’ initially being dented by a hawkish interest rate decision from the Federal Reserve.
AUD was able to regain ground amid optimism over upcoming US-China trade talks, but it failed to sustain this upside into the European trading session.
Turning to today, wider market trends may continue to drive the Australian dollar amid a lack of domestic data. Could an anxious mood see the ‘Aussie’ soften?
New Zealand dollar (NZD) uncertain amid choppy trade
The New Zealand dollar (NZD) also wavered in a wide range yesterday as investors reacted to the Fed decision, trade talk hopes, and other world events.
New Zealand economic data remains in short supply today, potentially leaving the ‘kiwi’ to trade on global risk dynamics.
Pound (GBP) climbs despite BoE rate cut
The pound (GBP) rallied yesterday, despite the Bank of England (BoE) cutting interest rates, as markets dialled back bets on more BoE rate cuts this year.
With two policymakers voting to leave rates unchanged and the bank only modestly lowering its inflation forecast, markets now expect just two more rate cuts in 2025 – one fewer than was priced in before the meeting.
Looking ahead, a speech from BoE Governor Andrew Bailey could impact GBP today. If Bailey signals an openness to further rate cuts should inflation ease more quickly than anticipated, Sterling may face pressure.
Euro (EUR) dented by USD strength
The euro (EUR) faced some pressure yesterday due to the common currency’s strong negative correlation with a rising US dollar (USD).
EUR then found some support at the start of the European trading session thanks to stronger-than-expected German industrial production figures. This helped the euro recoup some losses against weaker currencies.
Eurozone economic data is thin on the ground today, potentially leaving the euro without a clear trajectory.
US dollar (USD) boosted by Fed decision
The US dollar gained ground yesterday after the Federal Reserve held interest rates and indicated that it wanted to wait and gauge the impact of tariffs before acting again.
This supported the ‘greenback’ through to the evening, with USD zig-zagging higher in European and US trade.
A number of Fed officials are due to deliver speeches today. More signals that rates could remain higher for longer may boost USD, although any indication of recession concerns could pressure the American dollar.
Canadian dollar (CAD) slips despite recovering oil
The crude-linked Canadian dollar (CAD) faced selling pressure yesterday despite rising oil prices, possibly amid ongoing trade tensions with the US.
Canada’s latest unemployment rate is in the spotlight today. Could an expected uptick in joblessness see CAD slide?
Data releases
18:40 GBP BoE Bailey Speech
20:15 USD Fed Williams Speech
20:45 USD Fed Barr Speech
22:30 CAD Unemployment Rate (Apr)
22:30 USD Fed Kugler Speech