Australian dollar (AUD) wobbles on US-China trade framework news
Trade in the Australian dollar (AUD) was mixed yesterday, following the news that the US and China had agreed to a new trade ‘framework’ to reinforce the pact the two sides reached last month.
While an easing of US-China trade tensions was welcomed by investors, uncertainty over the details of the new framework ultimately limited market risk appetite and the appeal of currencies like the ‘Aussie’.
Australian economic data is in short supply today, likely leaving movement in AUD exchange rates tied to market risk dynamics.
New Zealand dollar (NZD) wavers in cautious trade
The New Zealand dollar (NZD) also came under pressure on Wednesday as market uncertainty saw investors shy away from risk-sensitive assets.
New Zealand’s latest electronic retail card figures could offer some support for the ‘kiwi’ this morning, if May’s figures point to an uptick in consumer spending.
Pound (GBP) firms following UK spending review
The pound (GBP) trended higher yesterday, as GBP investors digested the UK government’s latest spending review.
While the review got a largely muted response from analysts, by not spooking the bond markets Chancellor Rachel Reeves’s spending plans can broadly be seen as a success.
Today sees the release of the UK’s latest GDP figures. Will a contraction in growth at the start of the second quarter lead the pound to give up ground today?
Euro (EUR) buoyed by USD weakness
The euro (EUR) rallied on Wednesday, as it was bolstered by its negative correlation with the US dollar (USD).
Supporting these gains were hopes that the EU-US trade talks may now take priority for the Trump administration after signing a new framework with China.
EUR investors will look to speeches by European Central Bank (ECB) policymakers for fresh impetus today, with a broadly hawkish consensus likely to offer support to the single currency.
US dollar (USD) slips on underwhelming inflation reading
The US dollar came under pressure yesterday, after US inflation fell short of expectations in May, rising from 2.3% to 2.4%, against forecasts it would reach 2.5%.
The softer-than-expected reading triggered an immediate downturn in USD exchange rates as investors placed fresh bets on a Federal Reserve interest rate cut in July, although some of these losses were reversed by the end of the session.
Coming up, the ‘greenback’ may come under further pressure today, if producer price inflation also falls short of expectations.
Canadian dollar (CAD) underpinned by rising oil prices
The Canadian dollar (CAD) was stable on Wednesday, as it was supported by the continued appreciation of oil prices.
If energy prices continue to climb, it may help the ‘loonie’ to maintain a positive trajectory today.
Data releases
08:45 NZD Electronic Retail Card Spending (May)
16:00 GBP GDP (Apr)
19:00 EUR ECB Schnabel Speech
22:00 EUR ECB Guindos Speech
22:30 USD PPI (May)