Australian dollar (AUD) slips as inflation expectations cool
The Australian dollar (AUD) struggled to attract support on Thursday, as consumer inflation expectations fell to their lowest level since January.
The data was seen as slightly dampening expectations for further monetary tightening from the Reserve Bank of Australia (RBA).
In the absence of any notable domestic data, the ‘Aussie’ will be exposed to wider market trends today. If risk appetite continues to be suppressed by renewed tensions in the Middle East, AUD may face additional pressure.
New Zealand dollar (NZD) underpinned by RBNZ bets
The New Zealand dollar (NZD) was largely able to hold its ground through yesterday’s session as it continued to benefit from the hawkish repricing of Reserve Bank of New Zealand (RBNZ) interest rate bets.
Much like its Australian cousin, the ‘kiwi’ is likely to be sensitive to geopolitical tensions today, with any weakening of risk appetite likely to prove negative for NZD.
Pound (GBP) slips as investors book profits
The pound (GBP) retreated against most of its peers on Thursday, with the currency being undermined by a bout of profit-taking after climbing to multi-month highs earlier in the week.
GBP investors also appeared unimpressed by the UK’s latest GDP data, despite May’s month-on-month figures showing the economy returned to growth following April’s contraction.
UK data is in short supply today, likely leaving domestic politics to drive Sterling sentiment. Any further hints or even confirmation that incoming Prime Minister Andy Burnham will appoint
Shabana Mahmood as Chancellor could trigger a fresh bump in the pound.
Euro (EUR) muted in quiet trade
The euro (EUR) traded without strong directional bias yesterday amid a lull in Eurozone economic releases.
While some investors sought to short the single currency amid concerns over rising gas prices, this had little discernible impact on EUR.
The Eurozone will publish its latest consumer price index today, with the euro potentially facing headwinds if June’s finalised figures confirm a sharp deceleration of inflation.
US dollar (USD) buoyed by geopolitical uncertainty
The US dollar (USD) traded with modest support through yesterday’s session, with demand for the safe-haven currency being underpinned as hostilities in the Middle East intensified.
However, these gains were tempered by the latest US retail sales figures, which pointed to a notable slowdown in consumer spending at the end of the second quarter.
Closing out this week’s session is the publication of the latest US consumer sentiment index, with an expected improvement in morale potentially underpinning the ‘greenback’.
Canadian dollar (CAD) bolstered by rising oil prices
The Canadian dollar (CAD) ticked higher on Thursday as rising oil prices reflected positively on the commodity-sensitive currency.
Expect movement in the ‘loonie’ to remain tied to oil price dynamics through today’s session, with a continued appreciation of crude potentially extending the currency’s upward momentum into the weekend.
Data releases
19:00 EUR Inflation Rate (Jun)
00:00 USD Consumer Sentiment (Jul)