Australian dollar (AUD) drops amid fresh tariff fears
The Australian dollar (AUD) initially fell yesterday as fresh tariff fears soured the market mood following comments from US President Donald Trump.
AUD was able to recoup some of these losses in the evening, however, as growing bets on a Federal Reserve interest rate cut helped to revive risk appetite.
Australian data is absent from the calendar today, leaving the ‘Aussie’ exposed to any further shifts in the market mood.
New Zealand dollar (NZD) dented by risk aversion
The New Zealand dollar (NZD) also dropped yesterday before clawing back losses as a shifting market mood impacted the risk-sensitive currency.
NZD exchange rates could continue to be influenced by this morning’s manufacturing PMI as today’s session unfolds. Otherwise, risk appetite may drive the ‘kiwi’.
Pound (GBP) dented by downbeat GDP
The pound (GBP) stumbled at the start of yesterday’s European session after UK GDP contracted 0.3% in April, far more than forecast.
This downbeat data dented GBP exchange rates, although Sterling managed to recoup losses against weaker peers later on.
Turning to today, UK economic data is thin on the ground. Therefore, the pound may trade without a clear trajectory.
Euro (EUR) boosted by ECB comments
The euro (EUR) strengthened yesterday, thanks to the currency’s negative correlation with a plunging US dollar (USD) and hawkish comments from some European Central Bank (ECB) officials.
ECB policymaker Isabel Schnabel said that policy is in a ‘good place’, as price growth is likely to pick up again in the medium term, while President Christine Lagarde echoed these comments.
Some downbeat data from the Eurozone could pressure the common currency today, with economists expecting to see a narrowing trade surplus and a 1.3% decline in industrial production in April.
US dollar (USD) collapses on tariff woes and Fed bets
The US dollar plummeted to a three-year low yesterday amid renewed concerns that the Trump administration’s tariff policy would be bad for the US economy.
These losses were reinforced later in the session as higher-than-forecast jobless claims and softer factory-gate inflation fuelled bets on a July rate cut from the Fed.
Overnight, the latest US consumer sentiment reading could affect USD. Could an expected improvement in consumer morale boost the ‘greenback’?
Canadian dollar (CAD) mixed despite weaker oil prices
The crude-linked Canadian dollar (CAD) was mixed yesterday, with the currency avoiding losses despite falling oil prices.
Canadian economic data is in short supply today, leaving the ‘loonie’ open to oil-driven movement. Could a continued decline in crude see CAD weaken?
Data releases
08:30 NZD Business NZ PMI (May)
16:00 EUR German Wholesale Prices (May)
19:00 EUR Balance of Trade (Apr)
19:00 EUR Industrial Production (Apr)
00:00 USD Michigan Consumer Sentiment (Jun)