Australian dollar (AUD) finds fleeting gains as US-Iran deal is signed
The Australian dollar (AUD) initially firmed on Thursday, with the risk-sensitive currency catching bids amid the relief that followed the signing of the US-Iran interim peace agreement.
However, the ‘Aussie’ was forced to walk back the bulk of these gains during European trading hours as market sentiment weakened.
AUD data is in short supply today, likely leaving movement in the ‘Aussie’ tied to market risk dynamics.
New Zealand dollar (NZD) buoyed by positive GDP print
The New Zealand dollar (NZD) rallied yesterday on the back of stronger-than-expected domestic GDP figures for the first quarter but was unable to consolidate these gains as market risk appetite began to wane later in the session.
New Zealand will publish its latest trade figures this morning, with an expected narrowing of the trade surplus last month potentially leading the ‘kiwi’ to close the week on a sour note.
Pound (GBP) pressured by BoE rate decision
The pound (GBP) retreated against most of its peers on Thursday as the Bank of England (BoE) delivered its latest interest rate decision.
In addition to keeping rates on hold, the BoE revised its inflation forecast lower, further tempering expectations for a rate hike later in the year.
The result from the Makerfield by-election will be the primary focus for GBP investors at the end of this week, with speculation over a Labour leadership challenge likely to infuse fresh volatility into the pound.
Euro (EUR) undermined by USD demand
The euro (EUR) slipped yesterday as it was undermined by its inverse trade relationship with the US dollar (USD).
However, these losses were tempered somewhat by the US-Iran peace agreement and the continued fall in energy prices, which should relieve pressure on Europe amid its dependence on oil and gas imports.
Germany’s latest producer price index could underpin the euro today, as an expected acceleration in factory gate prices will bolster inflation expectations in the Eurozone’s largest economy.
US dollar (USD) strengthened by hawkish Fed bets
The US dollar firmed on Thursday as the currency continued to catch bids in the wake of the Federal Reserve’s latest interest rate decision.
USD investors continued to reprice Fed policy expectations following a notably hawkish shift under new Fed Chair Kevin Warsh, with the odds of a rate hike by the end of summer rising to around 70%.
In the absence of any notable US economic indicators, the US dollar may remain on the defensive today amid the optimism surrounding the US-Iran peace agreement.
Canadian dollar (CAD) subdued as oil prices continue to drop
The Canadian dollar (CAD) struggled to attract any meaningful support yesterday as a continued drop in oil prices curbed the appeal of the commodity-linked currency.
Coming up, the ‘loonie’ may face headwinds today if Canada’s latest retail sales figures point to a cooling of consumer spending in May.
Data Releases
08:45 NZD Balance of Trade (May)
16:00 EUR German PPI (May)
16:00 GBP Retail Sales (May)
22:30 CAD Retail Sales (May)