Australian dollar (AUD) slides in risk-off trade
The Australian dollar (AUD) initially rallied yesterday, with a stronger-than-expected domestic CPI print tempering Reserve Bank of Australia (RBA) interest rate cut expectations.
The ‘Aussie’ then fell back later in the session as these gains were overshadowed by a souring market mood.
AUD data is in short supply today, which could leave movement in the Australian dollar tied to market risk dynamics. Expect to see further losses if investors continue to err on the side of caution.
New Zealand dollar (NZD) rallies on hawkish RBNZ
The New Zealand dollar (NZD) strengthened on Wednesday in the wake of the Reserve Bank of New Zealand’s (RBNZ) latest interest rate decision. While the RBNZ cut rates, the bank signalled that rates are now close to neutral.
Coming up, the ‘kiwi’ may extend these gains later today, if New Zealand’s latest business confidence figures report morale rebounded this month.
Pound (GBP) left adrift amid lull in data
The pound (GBP) traded without a strong directional bias yesterday, amid the continued absence of any UK data of note.
While the appreciation of many of its peers placed pressure on GBP exchange rates, Sterling’s losses were tempered by the current optimism surrounding the UK economy.
UK economic data remains absent today, which may leave the pound to continue to trade without direction.
Euro (EUR) pressured by German unemployment figures
The euro (EUR) ticked lower on Wednesday, following the release of Germany’s latest unemployment figures.
While the unemployment rate remained unchanged, the number of unemployment people jumped by 34,000, the largest monthly increase since July 2022 and propelling the total number of people out of work to nearly three million.
In the absence of any notable Eurozone economic releases today, the direction of the euro may be determined by any reports regarding the progress of EU-US trade talks.
US dollar (USD) strengthens as markets await FOMC minutes
The US dollar trended broadly higher on Wednesday in advance of this month’s FOMC minutes, which reinforced the Federal Reserve’s more hawkish stance on future easing.
This upside in the ‘greenback’ was supported by a risk-averse market mood, with investors favouring the safe-haven currency amid renewed geopolitical uncertainty.
This evening sees the publication of the latest US GDP figures. The latest estimate of growth is expected to confirm a 0.3% contraction in Q1. If the print matches, or worse, falls below forecasts, it could revive recession worries and weigh heavily on the US dollar.
Canadian dollar (CAD) underpinned by rising oil prices
The Canadian dollar (CAD) rallied yesterday, with the commodity-linked currency rising in tandem with oil prices.
If oil prices continue to appreciate, the ‘loonie’ may extend these gains today.
Data releases
11:00 NZD Business Confidence (May)
22:30 USD GDP (Q1)
22:30 USD Initial Jobless Claims (24/May)