Australian dollar (AUD) lifted by China stimulus speculation
The Australian dollar (AUD) trended broadly higher at the end of last week, defying a risk-averse market mood amid reports that China could deploy additional stimulus measures.
This reflected positively on the ‘Aussie’ amid hopes the additional economic support from Beijing could feed through into the Australian economy through increased demand for raw materials like iron ore.
China will publish its latest trade figures later today. Could a rebound in imports last month bolster the appeal of the ‘Aussie’?
New Zealand dollar (NZD) dented by downbeat manufacturing PMI
The New Zealand dollar (NZD) weakened on Friday in response to another contraction in New Zealand’s factory sector.
The release of New Zealand’s latest services index could act as a headwind for the ‘kiwi’ this morning, if we see another sharp contraction in service sector growth last month.
Pound (GBP) tumbles on GDP miss
The pound (GBP) faced heavy selling pressure at the end of last week, after the UK’s latest GDP figures reported the economy unexpectedly shrank by 0.1% in May.
This marked a second consecutive month of contraction, and stoked bets the Bank of England (BoE) will cut interest rates in August.
Notable UK economic data is thin on the ground at the start of this week, potentially limiting movement in Sterling as markets brace for more impactful releases later in the session.
Euro (EUR) gains capped by USD strength
The euro (EUR) ticked higher through Friday’s session as a cautious market mood bolstered demand for safe-haven assets.
However, the upside in EUR was ultimately capped by the single currency’s negative correlation with the US dollar (USD).
EUR investors will be keeping a close eye on EU-US trade talks at the start of this week, amid hopes that the two sides are close to a deal.
US dollar (USD) firms amid trade uncertainty
The US dollar strengthened at the end of last week as investor sentiment deteriorated amid fresh trade uncertainty.
This followed a social post from US President Donald Trump, in which he threatened to impose a new blanket 15-20% tariff on US trading partners from the start of August.
Trade developments will likely remain in focus for USD investors at the start of this week, potentially infusing further volatility into the US dollar.
Canadian dollar (CAD) undermined by Trump’s latest tariff threat
The Canadian dollar (CAD) struggled on Friday as Trump’s threat to impose a 35% tariff on Canadian goods offset a surprise fall in domestic unemployment last month.
Looking ahead, barring a breakthrough in trade talks, US-Canadian trade tensions could continue to drag on the ‘loonie’ at the start of this week.
Data releases
08:30 NZD Services PSI (Jun)