Australian dollar (AUD) fluctuates amid Middle East uncertainty
The Australian dollar (AUD) initially faced headwinds on Friday as reports of clashes between the US and Iran in the Strait of Hormuz raised doubts over the Middle East peace process.
However, sentiment then rebounded through the session, allowing the ‘Aussie’ to reclaim the bulk of its losses by the time markets closed for the weekend.
Turning to the start of this week, AUD sentiment may be linked to China’s latest inflation figures, with fresh signs of deflationary pressures within Australia’s largest trading partner potentially placing pressure on the ‘Aussie’.
New Zealand dollar (NZD) wobbles in mixed trade
The New Zealand dollar (NZD) also traded in a wide range at the end of last week, amid the uncertain market mood.
In the absence of any notable domestic data, expect movement in the ‘kiwi’ to remain linked to market risk dynamics today.
Pound (GBP) firms as Starmer vows to continue as PM
The pound (GBP) proved remarkably resilient at the end of last week, despite notable Labour losses in the UK’s local elections.
This strength was attributed to Sir Keir Starmer’s pledge not to step down as Prime Minister, which eased bond market concerns that he could be replaced by a leader who might pursue more fiscally expansionary policies.
Unless we see UK bond yields continue to fall, a lull in UK economic indicators could leave the pound to tread water at the start of this week.
Euro (EUR) gains tempered by weak German data
The euro (EUR) trended broadly higher on Friday, supported by its inverse trade relationship with the US Dollar (USD).
However, the single currency’s upside potential was ultimately capped, as data showed a surprise contraction in German industrial production in March.
Eurozone economic releases are in short supply at the start of this week, which could initially leave the euro to trade without direction.
US dollar (USD) slides in risk-positive trade
The US dollar closed last week’s session on the defensive, having shed almost all of the gains made late on Thursday after US President Donald Trump declared the US-Iran ceasefire remains intact, despite clashes in the Strait of Hormuz.
The pullback in USD also came as a record fall in US consumer confidence offset a stronger-than-expected US payrolls print.
Unsurprisingly, movement in the US dollar is likely to remain tied to developments in the Middle East at the start of this week, with USD exchange rates likely to remain under pressure so long as investors remain optimistic about a potential peace deal.
Canadian dollar (CAD) slumps amid worrying jobs data
The Canadian dollar (CAD) faced notable selling pressure on Friday after Canada’s latest jobs data reported the labour market unexpectedly shrank last month.
Looking ahead, the ‘loonie’ may remain under pressure at the start of this week if oil prices continue to soften.