Australian dollar (AUD) pressured by slump in equity markets
The Australian dollar (AUD) closed last week’s session on the defensive as a global tech stock rout saw investors shy away from risk-sensitive assets.
Blue-chip stocks fell sharply through Friday’s session as markets grew increasingly wary of an AI bubble and the debt that some firms are taking on amid the rollout of costly data centres.
Turning to today, the ‘Aussie’ may remain on the back foot if this cautious mood persists into the start of this week’s session.
New Zealand dollar (NZD) slides in cautious trade
The New Zealand dollar (NZD) also faced headwinds on Friday amid the negative shift in risk sentiment.
New Zealand’s latest trade figures pose a potential risk to the ‘kiwi’ today as they are forecast to report a trade deficit in June.
Pound (GBP) slips as Burnham plays down Mahmood speculation
The pound (GBP) stumbled at the end of last week, following Andy Burnham’s first speech after being confirmed as leader of the Labour Party.
While Burnham promised to be ‘pro-business’, markets were left disappointed as he played down recent rumours that Shabana Mahmood is set to be his Chancellor, suggesting he hasn’t made any decisions yet on who will be in his ‘top team’.
Burham’s first day as Prime Minister is set to be dominated by his cabinet appointments, with any surprises potentially triggering some volatility into Sterling later today.
Euro (EUR) gains capped by USD strength
The euro (EUR) trended broadly higher on Friday as the single currency benefitted from the negative shift in risk appetite.
However, the euro’s gains remained modest as its upside potential was capped by its inverse trade relationship with the US dollar (USD).
Looking ahead, the release of Germany’s latest producer price index may weigh on EUR today as a cooling of factory gate inflation in the Eurozone’s largest economy is likely to further temper expectations ahead of this week’s European Central Bank (ECB) interest rate decision.
US dollar (USD) strengthened by stock selloff
The US dollar rallied through the end of last week as a global stock market selloff bolstered demand for safe-haven assets.
These gains were then reinforced after the University of Michigan reported a stronger-than-expected improvement in US consumer sentiment this month.
In the absence of any notable domestic economic indicators, the US dollar may prove sensitive to geopolitical developments at the start of this week, potentially extending its bullish momentum if tensions in the Middle East continue to escalate.
Canadian dollar (CAD) bolstered by rising oil prices
The Canadian dollar (CAD) strengthened on Friday as another rise in global oil prices bolstered the commodity-linked currency.
Coming up, Canada’s latest consumer price index could weigh on the ‘loonie’ later today if a slowdown in inflation further reinforces bets the Bank of Canada (BoC) will not follow other central banks in raising interest rates this year.
Data Releases
08:45 NZD Balance of Trade (Jun)
16:00 EUR German PPI (Jun)
22:30 CAD Inflation Rate (Jun)