Australian dollar (AUD) rises amid risk-on mood
The Australian dollar (AUD) rallied yesterday as easing tensions in the Middle East improved risk appetite.
US President Donald Trump announced that Israel and Iran had agreed to a ceasefire. Although the truce started shakily, hopes it would hold cheered investors.
Looking forward, AUD could trim its gains today. Australia’s latest monthly CPI indicator is expected to show that inflation eased in May, which may fuel bets on more Reserve Bank of Australia (RBA) interest rate cuts.
New Zealand dollar (NZD) climbs in cheery trade
The New Zealand dollar (NZD) also moved higher yesterday, as relief over the Israel-Iran truce boosted the risk-sensitive currency.
Today, the ‘kiwi’ could be impacted by New Zealand’s latest trade figures, released earlier this morning. Otherwise, risk appetite could drive movement, with the fragile ceasefire potentially supporting NZD.
Pound (GBP) firms against safer currencies
The pound (GBP) strengthened against its safer rivals yesterday, thanks to Sterling’s increasingly risk-sensitive nature.
GBP was also supported by hawkish comments from Bank of England (BoE) policymaker Megan Greene, who warned that inflation risks are tilted to the upside.
UK economic data is in short supply today, which could mean GBP exchange rates trade without a clear direction.
Euro (EUR) slips in spite of upbeat German data
The euro (EUR) fell yesterday, despite Germany’s latest business climate indicator printing above forecasts and rising to its highest level in over a year.
The safer single currency’s downside came amid an improving market mood, which saw investors favour riskier assets.
With Eurozone data thin on the ground today, market sentiment could continue to influence EUR exchange rates. Will a continued appetite for risk see the euro struggle?
US dollar (USD) slides as safe-haven flows dry up
The US dollar (USD) fell sharply yesterday as a risk-on rally saw investors abandon the safe-haven ‘greenback’.
Expected remarks from Federal Reserve Chair Jerome Powell limited further losses for USD in the evening, as his prepared testimony to Congress showed he would continue to push back on Donald Trump’s calls for an interest rate cut.
Risk appetite and Fed comments could determine the US dollar’s direction once again today, with Powell due to continue his testimony.
Canadian dollar (CAD) slumps as oil prices plummet
The crude-linked Canadian dollar (CAD) plunged yesterday, striking multi-month lows against GBP and EUR, as oil prices rapidly retreated following the news of a ceasefire in the Middle East.
Crude prices may continue to be the primary factor influencing the Canadian dollar today, with CAD poised for further losses if oil prices extend their decline.
Data releases
08:45 NZD Balance of Trade (May)
10:15 USD Fed Schmid Speech
11:30 AUD Monthly CPI Indicator (May)
00:00 USD Fed Chair Powell Testimony