Australian dollar (AUD) wavers despite improving morale
The Australian dollar (AUD) initially rose yesterday thanks to improvements in Australian consumer and business confidence.
However, the uptick in consumer confidence was smaller than expected, leaving the ‘Aussie’ vulnerable to losses against its stronger peers in the evening.
Looking ahead, Australian data is in short supply today. As a result, risk appetite and the outcome of US-China trade talks could drive most AUD movement.
New Zealand dollar (NZD) fluctuates as mood shifts
The New Zealand dollar (NZD) was similarly volatile yesterday, as a shifting market mood and lack of data led to choppy trade for the risk-sensitive ‘kiwi’.
New Zealand data is still thin on the ground today, leaving market risk dynamics the focus for NZD investors once gain.
Pound (GBP) slides as jobs data bolsters rate cut bets
The pound (GBP) slumped during yesterday’s European session, as a disappointing UK jobs report bolstered Bank of England (BoE) interest rate cut expectations.
Unemployment in the UK rose from 4.5% to 4.6% in April – its highest level since August 2021 – while wage growth slowed from 5.5% to 5.2%, below expectations for 5.4%.
Today the UK government’s spending review could impact GBP. A positive reception to pro-growth measures could lift the pound, while concerns over the potential need for further tax hikes could offset any optimism.
Euro (EUR) see-saws on USD correlation
The euro (EUR) faced volatility yesterday as the currency’s strong negative correlation with the US dollar (USD) created turbulence for EUR.
With USD initially rising and then retreating overnight, the euro initially fell before regaining ground through the European and US sessions.
Amid a lack of data today, EUR investors may look to a handful of speeches from European Central Bank (ECB) officials, including Chief Economist Philip Lane. Any indication that more rate cuts are on the way could undermine the euro.
US dollar (USD) rises and falls as trade talks continue
The US dollar started on positive footing yesterday, as USD investors remained optimistic about US-China trade talks taking place in the UK.
However, these tailwinds fizzled out as the session unfolded, while a broadly risk-on market mood deprived the ‘greenback’ of safe-haven flows.
Turning to today, USD investors will be laser-focused on the latest US inflation figures. An expected uptick in inflation will likely boost the US dollar by dampening the prospect of a Federal Reserve rate cut in the near future.
Canadian dollar (CAD) buoyed by rising oil prices
The crude-linked Canadian dollar (CAD) rose against its weaker rivals yesterday thanks to an appreciation in oil prices.
Oil price movements may continue to impact the ‘loonie’ today. Could a continued recovery in crude pull the Canadian dollar higher?
Data releases
19:30 EUR ECB Lane Speech
21:00 GBP Spending Review
22:30 USD Inflation Rate (May)