Australian dollar (AUD) remains suppressed by RBA rate decision
The Australian dollar (AUD) traded in a narrow range through yesterday’s session.
While an improving market mood offered support for the ‘Aussie’, the currency’s upside potential remained capped following the Reserve Bank of Australia’s (RBA) dovish interest rate cut on Tuesday.
Today, we will see the publication of Australia’s latest PMIs. May’s preliminary figures are expected to report another modest slowdown in private sector growth. Will this lead to further losses for AUD?
New Zealand dollar (NZD) subdued despite upbeat trade data
The New Zealand dollar (NZD) was mostly muted on Wednesday, with NZD investors largely shrugging off positive trade figures.
The New Zealand government will unveil its 2025 budget later today. A tepid response may see the ‘kiwi’ slide.
Pound (GBP) spikes following UK inflation surge
The pound (GBP) initially rallied on Wednesday, after the UK’s latest consumer price index reported UK inflation accelerated sharply in April.
However, these gains proved fleeting as economists warned that the surge was down to one-off factors and likely to be overlooked by the Bank of England (BoE).
Turning to today’s session, Sterling sentiment could be sapped by the UK’s latest PMIs, which are expected to report another contraction in the private sector this month.
Euro (EUR) bolstered by USD weakness
The euro (EUR) continued to catch bids through yesterday’s trading session, thanks to its negative correlation with the US dollar (USD).
However, ongoing speculation over future interest rate cuts from the European Central Bank (ECB) ultimately capped these gains.
Today also sees the release of the Eurozone’s own PMIs. Economists are forecasting an improvement in private sector growth this month, which could allow the euro to extend its positive momentum as we enter the second half of the week.
US dollar (USD) pressured by trade jitters
The US dollar remained on the defensive yesterday, as US trade policy uncertainty took hold once more.
This came as USD investors grow increasingly unnerved by the lack of progress in trade talks between the US and its major trading partners.
While not as influential as the ISM releases, today’s S&P PMIs could also act as a headwind for the US dollar if they report US private sector growth all but stalled this month.
Canadian dollar (CAD) slips despite positive oil prices
The Canadian dollar (CAD) softened on Wednesday, with the commodity-linked currency moving lower, despite the uptick in oil prices.
Coming up, the ‘loonie’ may come under pressure later today, if an expected fall in Canadian producer prices last month stokes Bank of Canada (BoC) interest rate cut bets.
Data releases
09:00 AUD Composite PMI (May)
18:00 EUR Composite PMI (May)
18:30 USD Composite PMI (May)
22:30 CAD PPI (Apr)
23:45 USD Composite PMI (May)