Australian dollar (AUD) buoyed despite Middle East tensions
The Australian dollar (AUD) firmed yesterday amid a surprisingly upbeat market mood, despite the US-Iran conflict continuing to escalate.
Rising commodity prices also seemed to underpin the ‘Aussie’, due to Australia’s export-oriented economy.
Today, the latest Westpac leading index could put modest pressure on the ‘Aussie’, if it declines 0.2% as forecast. However, AUD may be primarily driven by risk sentiment, with the currency likely to weaken if a downbeat mood takes hold.
New Zealand dollar (NZD) slashes gains despite strong inflation
The New Zealand dollar (NZD) also gained ground yesterday after new data showed New Zealand inflation accelerating more than forecast in the second quarter.
However, NZD seemed to suffer some profit-taking later on after touching multi-month highs against some of its rivals.
Market-moving New Zealand data is thin on the ground today, potentially leaving the ‘kiwi’ to trade on risk appetite. A souring mood could dent NZD.
Pound (GBP) slips amid political developments
The pound (GBP) fell yesterday, despite stronger-than-forecast UK jobs data, amid concerns about how the new Prime Minister Andy Burnham would fund his fiscal plans.
Burnham appointed John Healey as Chancellor of the Exchequer, rather than market favourite Shabana Mahmood. In addition, reports that the PM would be announcing some tax cuts in the week ahead raised questions about how he would fund these policies.
Turning to today, the UK’s latest inflation figures are the focus. If price pressures cooled last month, a scaling back of Bank of England (BoE) interest rate hike bets could dent GBP.
Euro (EUR) unsure despite strong German data
The euro (EUR) traded without a clear direction yesterday, despite stronger-than-forecast German data.
The country’s latest ZEW economic sentiment index exceeded forecasts, rising from 10.5 to a five-month high of 26.3 in July. However, EUR struggled to gain ground against its stronger peers.
A lack of Eurozone data and tomorrow’s looming European Central Bank (ECB) interest rate decision could mute the euro today.
US dollar (USD) wavers as markets digest US-Iran news
The safe-haven US dollar (USD) initially dipped yesterday as risk appetite remained resilient despite the intensifying conflict in the Middle East.
However, the ‘greenback’ was able to recoup these losses later in the session.
With US data in short supply today, market risk dynamics may drive the US dollar. If the crisis in the Middle East intensifies, the safe-haven ‘greenback’ could gain ground.
Canadian dollar (CAD) shored up by rising oil
The Canadian dollar (CAD) faced pressure yesterday after US President Donald Trump announced plans to impose a 50% tariff on most Canadian goods.
However, rising oil prices boosted the commodity-linked ‘loonie’, helping temper CAD losses.
Crude prices could drive CAD exchange rates today amid a lack of Canadian data. Meanwhile, US-Canada trade tensions may continue to weigh on the ‘loonie’.
Data releases
11:00 AUD Westpac Leading Index (Jun)
16:00 GBP Inflation Rate (Jun)