Australian dollar (AUD) drops as Chinese manufacturing contracts
The Australian dollar (AUD) fell yesterday after China’s latest Caixin manufacturing PMI revealed a shock contraction in April, signalling potential headwinds for Australian exports.
AUD managed to bounce off its worst levels during the European trading hours. However, with markets concerned about fresh tariff tensions, the risk-sensitive currency’s recovery was limited.
The focus today will be on Australia’s latest GDP figures. With economic growth expected to have slowed in the first quarter, the ‘Aussie’ could come under pressure once again.
New Zealand dollar (NZD) slips alongside AUD
The New Zealand dollar (NZD) traded in tandem with its Australian cousin yesterday, with the ‘kiwi’ slumping amid a risk-off mood before recouping some losses against its weaker rivals in the evening.
Amid a lack of New Zealand data today, NZD could remain primarily driven by risk appetite and AUD movement.
Pound (GBP) unsure amid interest rate ‘uncertainty’
The pound (GBP) traded in a wide range yesterday as markets digested mixed comments from Bank of England (BoE) Governor Andrew Bailey.
Speaking to the Treasury Select Committee, Bailey said that although the path for interest rates was downwards, the pace and number of rate cuts is now ‘shrouded in a lot more uncertainty’.
Today, the UK’s final services PMI results for May could impact GBP. If the survey score is revised higher, Sterling could strengthen.
Euro (EUR) slides as inflation dips below ECB’s target
The euro (EUR) retreated during yesterday’s European session following a weaker-than-forecast consumer price index.
Eurozone inflation eased from 2.2% to 1.9% in May, dipping below the European Central Bank’s (ECB) target and cementing bets for a rate cut tomorrow.
The Eurozone’s final services PMI this evening could impact EUR, although investors may be hesitant to reposition with the ECB decision looming.
US dollar (USD) climbs as market sentiment sours
The US dollar (USD) firmed yesterday, with a risk-off market mood supporting the safe-haven currency.
A stronger-than-expected US Job Openings and Labor Turnover survey (JOLTs) also aided USD, as job openings in America unexpectedly rose in April.
Looking ahead, could US data today boost the ‘greenback’? The latest ADP employment change is expected to show an uptick in job creation in May, while the ISM services PMI is forecast to have edged up last month too.
Canadian dollar (CAD) rallies in tandem with oil prices
The crude-linked Canadian dollar (CAD) traded in step with oil yesterday, initially weakening before marching higher in the evening as crude prices strengthened.
Turning to today, CAD investors will be focusing on the Bank of Canada’s (BoC) latest interest rate decision. While no policy changes are expected this month, CAD could slip if the bank sounds cautious about the country’s economic outlook.
Data releases
11:30 AUD GDP Growth Rate (Q1)
18:00 EUR Services PMI (May)
18:30 GBP Services PMI (May)
22:15 USD ADP Employment Change (May)
23:45 CAD BoC Interest Rate Decision
00:00 USD ISM Services PMI (May)