Australian dollar (AUD) wavers in uneven trade
Trade in the Australian dollar (AUD) was mixed yesterday. The currency initially attracted some support as market sentiment improved in response to a modest rebound in Chinese inflation.
However, these gains were swiftly tested as sentiment weakened again as US President Donald Trump threatened to impose 50% tariffs on all copper imports to the US.
In the absence of any notable domestic data, movement in the ‘Aussie’ is likely to be linked to market risk dynamics today, with a cautious mood likely to temper AUD demand.
New Zealand dollar (NZD) muted as RBNZ leaves policy untouched
The New Zealand dollar (NZD) traded sideways on Wednesday, after the Reserve Bank of New Zealand (RBNZ) left interest rates unchanged but conceded that an August rate cut is likely.
NZD data is also in short supply today, which could leave the ‘kiwi’ vulnerable if a risk-off mood prevails.
Pound (GBP) steady despite BoE Bailey’s warning about risks and uncertainty
The pound (GBP) traded without strong direction yesterday, with the currency stabilising following Tuesday’s sharp selloff.
Elsewhere, Bank of England (BoE) Governor Andrew Bailey warned the UK is particularly exposed to geopolitical risks, although this appeared to have a limited impact on Sterling.
The UK’s data calendar remains quiet today, which may leave the pound exposed to wider market trends.
Euro (EUR) pressured by lack of trade deal progress
The euro (EUR) trended broadly lower yesterday amid transatlantic trade uncertainty.
While EU leaders remain optimistic about reaching a trade deal with the US by the end of the month, EUR investors appear to be growing increasingly frustrated by the lack of clear progress.
A letter from the US outlining new tariff measures with the EU is expected to reach European leaders today, with the euro poised to slide if it proposes a higher levy on EU goods.
US dollar (USD) dented by tariff uncertainty
The US dollar (USD) initially dipped on Wednesday as Trump’s latest tariff threats rattled USD investors.
However, the latest FOMC minutes helped to stimulate USD demand towards the end of the session as a broadly hawkish consensus prompted a further trimming of Federal Reserve interest rate cut expectations.
Coming up, the latest US initial jobless claims could act as a headwind for the US dollar later today as investors forecast new claims will have begun to rise again at the start of July.
Canadian dollar (CAD) pressured by oil price dip
The Canadian dollar (CAD) trended lower yesterday as demand for CAD was suppressed by a softening of oil prices.
If this downtrend in oil prices persists, the ‘loonie’ will likely remain on the defensive today.
Data releases
22:30 USD Initial Jobless Claims (5/Jul)