Australian dollar (AUD) bolstered by trade hopes
The Australian dollar (AUD) strengthened on Wednesday due to fresh trade optimism.
This optimism followed the announcement of a US-Japan trade deal as well as a potential extension to US-China trade talks.
Australia’s latest PMI figures could act as a headwind for the ‘Aussie’ today, with economists predicting private sector growth will have slowed to a crawl this month.
New Zealand dollar (NZD) strengthens in risk-on trade
The New Zealand dollar (NZD) also appreciated yesterday, thanks to the positive shift in market risk appetite.
If this upbeat mood persists into today’s session, the ‘kiwi’ may be able to build on these gains.
Pound (GBP) firms as sentiment improves
The pound (GBP) traded with modest gains yesterday as the upbeat mood underpinned Sterling sentiment.
However, the upside in GBP remained limited as investors continued to express concern over the UK’s fiscal outlook.
The UK’s PMIs might provide a boost for the pound today, as July’s preliminary figures are expected to report an acceleration of growth in the vital services sector.
Euro (EUR) dips ahead of ECB rate decision
The euro (EUR) weakened on Wednesday amid a sense of caution ahead of the European Central Bank’s (ECB) impending interest rate decision.
EUR demand was also suppressed by the Eurozone’s latest consumer confidence index, which reported morale remains downbeat.
The ECB’s rate decision will unsurprisingly be the focus of today’s session. No policy changes are expected, but the ECB’s guidance could bolster EUR exchange rates if the bank signals interest rates are close to neutral.
US dollar (USD) dips on US-Japan trade deal announcement
The US dollar (USD) trended lower through yesterday’s session as markets digested the latest trade developments.
While USD investors welcomed the trade deal with Japan, the resulting risk-on flows, coupled with US President Donald Trump’s continued criticism of Federal Reserve Chair Jerome Powell, weighed on USD demand.
Coming up, the focus for USD investors today will be the latest S&P PMIs. While not as influential as the ISM releases, the S&P indexes may lift the ‘greenback’ if they report an improvement in private sector growth this month.
Canadian dollar (CAD) subdued amid softer crude prices
The Canadian dollar (CAD) was muted on Wednesday as a softening of oil prices limited the appeal of the commodity-linked currency.
Canada’s latest retail sales figures could weigh on the ‘loonie’ later today as economists forecast another decline in sales growth last month.
Data releases
09:00 AUD Manufacturing PMI (Jul)
09:00 AUD Services PMI (Jul)
18:00 EUR Manufacturing PMI (Jul)
18:00 EUR Services PMI (Jul)
18:30 GBP Manufacturing PMI (Jul)
18:30 GBP Services PMI (Jul)
22:15 EUR ECB Interest Rate Decision
22:30 CAD Retail Sales (Jun)
23:45 USD Manufacturing PMI (Jul)
23:45 USD Services PMI (Jul)