Australian dollar (AUD) unclear as risk sentiment shifts
The Australian dollar (AUD) wavered yesterday, initially weakening as risk appetite faltered amid the ongoing Israel-Iran conflict.
The market mood then recovered amid speculation US President Donald Trump was working on a ceasefire proposal. Trump denied this, saying he was considering something ‘better than a ceasefire’.
Turning to today, market risk dynamics may continue driving AUD, with events in the Middle East likely to dictate the mood.
New Zealand dollar (NZD) see-saws amid unclear mood
The New Zealand dollar (NZD) also slipped and then bounced back yesterday, with the ‘kiwi’ tracking the changes in market risk appetite.
Sentiment could remain the defining factor for NZD exchange rates today. We may see further volatility if the mood continues to shift.
Pound (GBP) weakens ahead of BoE decision
The pound (GBP) trended lower yesterday, with the UK currency losing ground ahead of the Bank of England’s (BoE) interest rate decision on Thursday.
Although the bank is expected to leave interest rates unchanged, recent weak UK data has opened up the slight possibility of a rate cut at this month’s meeting, which weighed on Sterling.
Looking ahead, the UK’s consumer price index today could support the pound. Although inflation is set to have eased to 3.4% last month, this is still well above the Bank of England’s 2% target.
Euro (EUR) unsure despite upbeat German data
The euro (EUR) was mixed yesterday, despite Germany’s latest ZEW economic sentiment index smashing forecasts to show a strong improvement this month.
Despite this upbeat data, EUR came under pressure as Donald Trump said the EU was not yet offering a ‘fair deal’ on trade and again threatened to impose unilateral tariffs.
The Eurozone’s finalised inflation figures could pressure EUR today if they confirm inflation eased to 1.9% in May, although movement may be limited unless the rate is revised higher or lower.
US dollar (USD) rallies as sentiment sours
The US dollar (USD) initially wavered yesterday as the uncertain market mood kept the safe-haven ‘greenback’ fluctuating in a narrow range.
However, with the market mood souring as the session went on, the US dollar was able to rally in the evening. USD even brushed off some weak US retail sales and industrial production data.
Turning to today, the latest US initial jobless claims figure could affect USD. If new unemployment claims remained historically high last week, the ‘greenback’ could come under pressure.
Canadian dollar (CAD) rebounds in lockstep with USD
The crude-linked Canadian dollar (CAD) traded in tandem with its US counterpart yesterday, with CAD initially subdued but rallying in the evening. A rise in oil prices also helped to underpin the ‘loonie’.
Canadian data is absent from the calendar today, meaning oil prices may influence the direction of the ‘loonie’.
Data releases
16:00 GBP Inflation Rate (May)
19:00 EUR Inflation Rate (May)
22:30 USD Initial Jobless Claims (14/Jun)