Australian dollar (AUD) firms amid improving mood
The Australian dollar (AUD) appreciated through yesterday’s session amid a prevailing risk-positive market mood.
This was linked to broad weakness in the US dollar (USD) as well as growing speculation that Beijing may ramp up stimulus measures to help counter the pressures posed by the increased fragmentation of global trade.
The ‘Aussie’ may be able to extend these gains through today’s session, if Australia’s latest trade figures report a rebound in exports in June.
New Zealand dollar (NZD) buoyed by better-than-expected jobs report
The New Zealand dollar (NZD) also accelerated on Wednesday, with the currency drawing support from a smaller-than-expected increase in unemployment in the second quarter.
Whether the ‘kiwi’ can replicate this success today will be dependent on market risk sentiment. A cautious shift could see NZD exchange rates relinquish some of their recent gains.
Pound (GBP) muted ahead of BoE rate decision
The pound (GBP) lacked direction in midweek trade as GBP investors focused on the Bank of England’s (BoE) impending interest rate decision.
While a 25bps rate cut is all but baked in, markets will be looking for more guidance on how the bank will shape monetary policy through the remainder of 2025.
If the outlook for the UK labour market remains a key concern, it may push the BoE to adopt a more dovish approach to monetary policy and pull the pound lower today.
Euro (EUR) gains capped by disappointing data
The euro (EUR) trended broadly higher on Wednesday, thanks to the single currency’s negative correlation with the US dollar.
However, these gains were limited in the face of lacklustre EUR data, as German factory orders and Eurozone retail sales fell short of expectations in June.
Germany’s latest industrial production data may also exert pressure on the euro today, as economists predict a contraction in factory output in June.
US dollar (USD) pressured by US economic jitters
The US dollar trended lower yesterday, amid mounting concern over the economic trajectory of the US.
Adding to the pressure on the ‘greenback’ were reports that US President Donald Trump is preparing to announce his nominee for the next Chair of the Federal Reserve, and the uncertainty this casts over future US central bank monetary policy.
Last week’s initial jobless claims will be in focus for USD investors today. Any additional signs of slack in the US labour market are likely to stoke Fed rate cut bets and weigh on the US dollar.
Canadian dollar (CAD) steady as oil prices rebound
The Canadian dollar (CAD) held its ground on Wednesday as rallying oil prices helped to offset Canadian tariff woes.
Canada’s latest Ivey PMI could provide a boost for the ‘loonie’ in today’s session, if it reports that the pace of growth in the private sector accelerated again in July.
Data releases
11:30 AUD Trade Balane (Jun)
16:00 EUR German Industrial Production (Jun)
21:00 GBP BoE Interest Rate Decision
22:30 USD Initial Jobless Claims (2/Aug)
00:00 CAD Ivey PMI (Jul)