Australian dollar (AUD) finds fleeting gains on bumper employment data
The Australian dollar (AUD) initially rallied yesterday as a particularly strong rise in domestic employment growth last month bolstered bets for further monetary tightening from the Reserve Bank of Australia (RBA).
However, the ‘Aussie’ subsequently relinquished these gains overnight amid a sharp deterioration in market risk sentiment.
The AUD selling bias may remain in place this morning if Australia’s latest PMIs point to a further slowdown in private sector activity this month.
New Zealand dollar (NZD) slumps in cautious trade
The New Zealand dollar (NZD) faced notable selling pressure on Thursday amid the prevailing risk-off market mood.
Expect movement in the ‘kiwi’ to remain tied to market risk dynamics today, with NZD likely to remain under pressure amid mounting geopolitical uncertainty.
Pound (GBP) flat amid rising UK borrowing costs
The pound (GBP) was broadly rangebound yesterday amid fresh concern over the UK bond market.
10-year gilt yields climbed to around 5.1% on Thursday, striking their highest level in over two months amid concern over the government’s commitment to its own fiscal rules as Andy Burnham announced a new tax-relief package for pubs.
Looking ahead, the pound may struggle today amid forecasts that UK retail sales and PMI data will highlight the challenges facing the UK economy.
Euro (EUR) rangebound as ECB leaves rates on hold
The euro (EUR) traded sideways on Thursday, after the European Central Bank (ECB) left interest rates on hold at 2.25%, in line with consensus forecasts.
Speaking following the decision, ECB President Christine Lagarde highlighted that persistent energy cost pressures will likely keep Eurozone inflation above the bank’s target into early 2027, but tempered bets for further tightening by pointing out growing threats to economic growth.
Turning to today’s session, the euro may be able to break out of confinement if July’s preliminary PMIs signal an uptick in Eurozone private sector activity.
US dollar (USD) jumps as Houthis strike tankers in the Red Sea
The US dollar (USD) strengthened against the majority of its peers yesterday amid a worrying spike in global energy prices as Houthi rebels in Yemen expanded the Middle East conflict to the Red Sea.
Aiding USD’s ascent was data showing that US jobless claims fell to an almost 60-year low last week.
If the situation in the Middle East deteriorates further, we are likely to see investors continue to favour the safe-haven ‘greenback’ through the remainder of this week’s session.
Canadian dollar (CAD) bolstered by oil price surge
The Canadian dollar (CAD) enjoyed strong support on Thursday as global oil prices surged just shy of $100 per barrel, allowing the commodity-linked currency to shrug off a slowdown in domestic retail sales last month.
Coming up, the ‘loonie’ looks well positioned to extend its gains today if oil prices continue to appreciate.
Data Releases
09:00 AUD Composite PMI (Jul)
16:00 GBP Retail Sales (Jun)
18:00 EUR Composite PMI (Jul)
18:30 GBP Services PMI (Jul)
22:30 CAD PPI (Jun)
23:45 USD Composite PMI (Jul)