Australian dollar (AUD) sidelined by modest recovery in Chinese imports
The Australian dollar (AUD) was muted at the start of this week amid a cautious market mood.
This was linked to ongoing US trade uncertainty as well as China’s latest trade data, which reported a smaller-than-expected rebound in imports last month.
The focus for AUD investors today will be on China’s latest GDP print. Expect to see the ‘Aussie’ weaken if Australia’s largest trading partner reports a larger-than-expected slowdown in growth in the second quarter.
New Zealand dollar (NZD) pressured by slowing services activity
The New Zealand dollar (NZD) faced headwinds on Monday, as data showed growth in New Zealand’s services sector contracted for the fifth consecutive month in June.
NZD exchange rates are also likely to be linked to China’s GDP release today, with a disappointing print likely to sap risk appetite and the appeal of the ‘kiwi’.
Pound (GBP) pressured by dovish BoE comments
The pound (GBP) was subdued yesterday, following dovish comments from Bank of England (BoE) Governor Andrew Bailey.
Speaking to The Times, Bailey signalled that more aggressive interest rate cuts may be on the horizon if the UK’s labour market continues to weaken.
Turning to today’s session, Sterling may see limited movement, as GBP investors brace for high-impact UK economic releases in the second half of the week.
Euro (EUR) undermined by Trump tariff threat
The euro (EUR) struggled to attract support on Monday, in the face of US President Donald Trump’s latest tariff threat.
Despite ongoing EU-US trade talks, Trump announced over the weekend his plans to impose a 30% tariff on EU goods from 1 August, raising fresh questions over the future of the transatlantic trade relationship.
Coming up, Germany will publish its latest ZEW economic sentiment index later today. If morale continued to improve this month, it could help revive EUR demand.
US dollar (USD) supported by risk-off flows
The US dollar (USD) ticked higher during yesterday’s session as a tepid market mood saw investors favour the safe-haven currency.
However, the upside in the ‘greenback’ remained limited amid the uncertainty surrounding Trump’s new tariffs on Mexico and the EU.
The latest US consumer price index will be in the spotlight today. June’s CPI figures are forecast to report inflation accelerated to a four-month high, likely denting Federal Reserve rate cut expectations and lifting the US dollar.
Canadian dollar (CAD) steady as oil prices firm
The Canadian dollar (CAD) was flat on Monday as an uptick in oil prices helped to offset ongoing concerns over US-Canada trade talks.
Canada will also publish its latest CPI figures today. Inflation is expected to accelerate for the first time since February but remain below 2%, which may stoke dovish Bank of Canada (BoC) rate cut bets and drag on the ‘loonie’.
Data releases
10:30 AUD Consumer Confidence (Jul)
19:00 EUR German ZEW Economic Sentiment (Jul)
10:30 CAD Inflation Rate (Jun)
10:30 USD Inflation Rate (Jun)