Australian dollar (AUD) recovers from initial wobble
The Australian dollar (AUD) initially wobbled yesterday as the impact of a 2.4% drop in Australian exports in April was offset by an upbeat Chinese services PMI and a risk-on market mood.
Later in the session, the ‘Aussie’ managed to shrug off the worrying trade data and rise amid the uptick in risk appetite.
With notable Australian data absent from the calendar today, risk dynamics could continue driving AUD. If markets remain upbeat, the Australian dollar could strengthen.
New Zealand dollar (NZD) firms amid risk-on mood
The New Zealand dollar (NZD) also started yesterday’s session rather muted, before marching higher as the day progressed and the market mood improved.
New Zealand data is also thin on the ground during today’s session, leaving the ‘kiwi’ likely to be influenced by market risk appetite.
Pound (GBP) rudderless in absence of data
The pound (GBP) lacked a clear directional bias yesterday amid an ongoing lull in UK data.
This left the increasingly risk-sensitive currency to trade in a wide range. While Sterling was able to rise against some safer peers – including GBP/USD hitting a three-year high – it lost out elsewhere.
Sterling finishes the week with market-moving UK data still absent from the calendar, potentially leaving the pound rudderless once again.
Euro (EUR) rallies as ECB strikes hawkish tone
The euro (EUR) strengthened yesterday following the European Central Bank’s (ECB) interest rate decision.
ECB President Christine Lagarde indicated that the bank was ‘getting closer’ to its neutral rate, as well as saying that a fragmentation of global trade could increase inflation.
Looking ahead, weak data from Germany could weigh on EUR today. Exports and industrial production in the Eurozone’s largest economy are expected to have contracted in April.
US dollar (USD) slides as jobless claims rise
The US dollar (USD) slipped yesterday after US initial jobless claims unexpectedly rose to their highest level since early October.
The latest data adds to a growing picture of a slowing US labour market, fuelling bets that the Federal Reserve may soon cut interest rates.
Today, all eyes are on the latest US non-farm payrolls figure. If we see a slowdown in US job creation in May, the ‘greenback’ could end the week on a sour note.
Canadian dollar (CAD) falls as trade deficit widens
The Canadian dollar (CAD) fell yesterday, with the ‘loonie’ dragged lower by a widening trade deficit and a weaker US dollar.
Canada’s latest jobs data could pressure CAD later today, with economists expecting a rise in unemployment last month.
Data releases
16:00 EUR German Balance of Trade (Apr)
16:00 EUR German Industrial Production (Apr)
19:00 EUR Retail Sales (Apr)
22:30 CAD Unemployment Rate (May)
22:30 USD Non Farm Payrolls (May)