Australian dollar (AUD) slides in risk-off trade
The Australian dollar (AUD) got off to a poor start this week amid a deteriorating market mood.
This was linked to the resumption of hostilities in the Middle East, with the Strait of Hormuz closing again as the US and Iran launched fresh military strikes at one another.
Looking ahead, Australia’s latest consumer and business confidence surveys may offer support for the ‘Aussie’ this morning if they report improvements in morale.
New Zealand dollar (NZD) underpinned by upbeat PMI data
The New Zealand dollar (NZD) was able to shrug off the prevailing risk-off mood on Monday as it was supported by a surprise expansion in New Zealand’s latest services PMI.
NZD data is in short supply today, so the ‘kiwi’ may struggle to consolidate these gains if the mood remains downbeat.
Pound (GBP) uneven in mixed trade
Trade in the pound (GBP) was mixed yesterday, with the currency firming against other risk-sensitive currencies but giving up ground against its safe-haven peers.
Domestic politics simultaneously constrained Sterling as GBP investors await the formal confirmation that Andy Burnham will be the UK’s next Prime Minister.
GBP investors will look to a speech by Bank of England (BoE) Governor Andrew Bailey for fresh impetus today. If Bailey maintains his cautious stance on monetary policy despite the renewed inflation risks posed by the latest events in the Middle East, Sterling is likely to stumble.
Euro (EUR) buoyed by ECB bets
The euro (EUR) ticked higher on Monday, supported by expectations for further monetary tightening from the European Central Bank (ECB).
Bets for another rate hike strengthened as the spike in energy prices following the US and Iranian strikes was seen as stoking inflationary risks in the Eurozone.
Eurozone data remains in short supply today, which may leave movement in the euro to be driven by wider market trends.
US dollar (USD) firms amid US-Iran strikes
The US dollar (USD) initially firmed yesterday as the eruption of fresh hostilities between the US and Iran in and around the Strait of Hormuz stoked safe-haven demand.
However, the ‘greenback’ later walked back a portion of these gains amid efforts by several Middle East nations to mediate tensions.
The latest US consumer price index will be centre stage today, with the US dollar likely to weaken if inflation cooled as sharply as expected in June.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) trended higher through Monday’s session, with the appeal of the commodity-linked ‘loonie’ being buoyed by a spike in global oil prices.
While rising oil prices may continue to underpin CAD today, the upside potential of the currency may be tempered in advance of the Bank of Canada’s (BoC) interest rate decision on Wednesday.
Data Releases
10:30 AUD Consumer Confidence (Jul)
11:30 AUD Business Confidence (Jun)
16:00 GBP BoE Bailey Speech
22:30 USD Inflation Rate (Jun)