Australian dollar (AUD) falls as sentiment sours
The Australian dollar (AUD) slid yesterday as a souring market mood weighed heavily on the risk-sensitive currency.
Although market risk appetite improved during the European trading hours, the ‘Aussie’ remained under pressure amid a recovery in the US dollar (USD).
Looking ahead, Australia’s monthly CPI indicator is the focus for AUD investors today. A slight cooldown in inflation last month could pressure the ‘Aussie’, if it is seen as boosting Reserve Bank of Australia (RBA) interest rate cut bets.
New Zealand dollar (NZD) knocked by risk-off mood
The New Zealand dollar (NZD) also stumbled yesterday, with the riskier ‘kiwi’ weakening amid market risk aversion.
Later today, the ‘kiwi’ could slide if the Reserve Bank of New Zealand (RBNZ) lowers rates as expected and hints at further cuts to come.
Pound (GBP) mixed amid IMF commentary
The pound (GBP) saw mixed movement on Tuesday as markets digested the IMF’s latest health-check of the UK economy.
Although the IMF nudged up its growth forecast for 2025 from 1.1% to 1.2%, it also warned of headwinds and urged Chancellor Rachel Reeves to ease her fiscal rules to avoid the need for emergency spending cuts.
UK economic data is in short supply today, potentially leaving the pound to trade without a clear direction.
Euro (EUR) stifled by USD recovery
The euro (EUR) was also mixed during yesterday’s session, as the currency came under pressure due to its negative correlation with the rising US dollar.
This strength in USD offset a larger-than-expected improvement in Eurozone economic sentiment and relief that the US was delaying tariffs on the EU, therefore keeping the euro from climbing against some peers.
German unemployment and Eurozone consumer inflation expectations could impact EUR today. Could an uptick in the latter underpin EUR?
US dollar (USD) rises as Trump delays EU tariffs
The US dollar strengthened yesterday as USD investors welcomed Donald Trump’s delaying of tariffs on the EU and a risk-off mood supported the safe-haven ‘greenback’.
As the session progressed, an improvement in the market mood capped USD’s gains. In addition, a sharp slump in US durable goods orders put a lid on the US dollar.
Turning to today, the US dollar could be muted as markets await the Federal Reserve’s latest meeting minutes, which are due out early tomorrow morning.
Canadian dollar (CAD) uncertain on USD and oil correlations
The Canadian dollar (CAD) was pulled in different directions yesterday due to its positive correlations with a stronger US dollar and weaker oil prices. This led to mixed movement in the ‘loonie’.
With Canadian data absent from today’s economic calendar, oil price dynamics may drive CAD exchange rates. If prices remain muted, CAD could find itself trapped in a narrow range.
Data releases
11:30 AUD Monthly CPI Indicator (Apr)
12:00 NZD RBNZ Interest Rate Decision
17:55 EUR German Unemployment Rate (May)
18:00 EUR ECB Consumer Inflation Expectations (Apr)