Australian dollar (AUD) rises despite US-China tensions
The Australian dollar (AUD) opened this week’s session on positive footing, with the currency catching bids amid an improvement in risk appetite.
While fresh US-China trade tensions were of some concern to AUD investors, this was offset by a sharp drop in the US dollar (USD).
This morning will see the publication of the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting. We saw a notable dovish shift by the bank at its May policy meeting, which could drag on the ‘Aussie’ if this is reflected in the minutes.
New Zealand dollar (NZD) firms amid risk-on flows
The New Zealand dollar (NZD) also strengthened on Monday as it benefited from the positive shift in market risk appetite.
NZD data is in short supply today, which is likely to leave the ‘kiwi’ highly sensitive to market risk dynamics.
Pound (GBP) directionless amid lull in data
Trade in the pound (GBP) was mixed at the start of this week, with the currency influenced more by external factors than domestic developments.
The focus on external factors saw GBP investors largely shrug off the latest UK manufacturing PMI, despite May’s finalised figures being revised slightly higher.
Coming up, GBP investors will look to comments by Bank of England (BoE) policymakers for fresh impetus today as they are grilled by the Treasury Select Committee.
Euro (EUR) gains capped ahead of expected ECB rate cut
The euro (EUR) trended broadly higher on Monday as the single currency was strengthened by its negative correlation with the US dollar.
However, these gains remained limited in scope, with EUR investors remaining cautious ahead of the European Central Bank’s (ECB) upcoming interest rate decision.
A key focus today will be the Eurozone’s latest consumer price index. May’s preliminary CPI figures are expected to report another cooling of inflation, potentially stoking ECB rate cut bets and weakening the euro.
US dollar (USD) pressured by fresh trade policy uncertainty
The US dollar retreated through yesterday’s session as renewed US-China trade tensions and President Donald Trump’s move to raise tariffs on all steel and aluminium imports revived US economic jitters.
These concerns were exacerbated by the latest ISM manufacturing PMI, which reported US factory sector growth slipped to a six-month low in May.
The US dollar may extend these losses today, if the latest US Job Openings and Labor Turnover survey (JOLTs) reports that the American labour market continued to slow in April.
Canadian dollar (CAD) pressured by USD weakness
The Canadian dollar (CAD) ticked lower on Monday as the currency was hindered by its positive correlation with the US dollar.
Looking forward, CAD exchange rates may be guided by oil price movements today. If crude prices continue to rally it may also carry the ‘loonie’ higher.
Data releases
11:30 AUD RBA Meeting Minutes
19:00 EUR Inflation Rate (May)
00:00 USD JOLTS Job Openings (Apr)