Australian dollar (AUD) slides following surprise contraction in retail sales
The Australian dollar (AUD) trended lower through Friday’s trading session, following the publication of Australia’s latest retail sales data.
The Australian Bureau of Statistics (ABS) reported retail sales unexpectedly contracted by 0.1% in April, highlighting how tariff uncertainty has shaken consumer confidence.
Turning to the start of this week, we may see a renewed focus on US trade policy inject fresh volatility into risk-sensitive assets like the ‘Aussie’.
New Zealand dollar (NZD) pressured by risk-off flows
The New Zealand dollar (NZD) also stumbled at the end of last week as a cautious market mood limited demand for the ‘kiwi’.
In the absence of any notable domestic data, expect NZD exchange rates to remain highly sensitive to market risk dynamics today.
Pound (GBP) sidelined by dovish BoE remarks
The pound (GBP) struggled to attract support at the end of last week, following dovish comments from Bank of England (BoE) policymaker Alan Taylor.
Speaking to the Financial Times, Taylor dismissed the recent spike in inflation and voiced his support for the bank to accelerate the pace of its monetary easing.
Coming up, the UK’s latest manufacturing PMI may act as a headwind for Sterling at the start of this week as May’s finalised figures are expected to report a sharp contraction in factory sector growth.
Euro (EUR) pressured by USD resurgence
The euro (EUR) trended broadly higher through the first half of Friday’s session, supported by a stronger-than-expected German inflation print.
The single currency then stumbled through towards the end of the session as it was undermined by its negative correlation with the resurgent US dollar (USD).
Today also sees the publication of the Eurozone’s own manufacturing PMI, with the euro potentially strengthening if factory sector activity improved in line with expectations.
US dollar (USD) climbs amid US-China trade deal fears
The US dollar was initially subdued on Friday, after an expected drop in the Federal Reserve’s preferred indicator for inflation, the core PCE price index.
However, USD demand then rebounded following comments from US President Donald Trump in which he accused China of violating the tariff truce agreed between the two powers a couple of weeks ago.
The latest ISM manufacturing PMI will be the primary focus today, with the US dollar potentially facing fresh pressure if US factory activity continued to contract last month.
Canadian dollar (CAD) buoyed by upbeat GDP release
The Canadian dollar (CAD) closed last week’s session on a positive note, after Canada’s first quarter GDP figures outpaced expectations.
Looking ahead, the ‘loonie’ may struggle to sustain these gains if the recent slump in oil prices persists into this week.
Data Releases
09:00 AUD Manufacturing PMI (May)
18:00 EUR Manufacturing PMI (May)
18:30 GBP Manufacturing PMI (May)
00:00 USD ISM Manufacturing PMI (May)