Australian Dollar Stalls as Trade Tensions Remain
The Australian Dollar was left treading water on Wednesday, with investors steering clear of the risk-sensitive currency as markets remained wary of the recent escalation in trade tensions between the US and China.
AUD investors are likely to keep a close eye out for any additional developments overnight on Thursday as China’s vice-premier Liu Hi travels to Washington for the latest round of talks.
Pound Slumps as Brexit Jitters Return
The Pound (GBP) weakened across the board on Wednesday as the UK currency was pressured by fresh Brexit angst. Driving the negativity in Sterling sentiment were reports that cross-party talks were close to collapse, much to the disappointment of GBP investors who appeared hopeful of a deal just last week.
Analysts suggest that the talks were effectively killed off today as the Labour Party launches its EU election manifesto, in which it will need to outline its official stance on Brexit. This would be difficult to do if it remains in talks with the government.
Euro Boosted by German Industrial Data
EUR investors were pleasantly surprised during the European session on Wednesday, with the Euro finding support after German industrial production was reported to have expanded for a second consecutive month in March, bolstering hopes that next week’s GDP figures could bring a welcome rebound in growth.
However the Euro may struggle to maintain its momentum today, with a lull in notable data likely to leave the single currency vulnerable to external movement for the remainder of the week.
US Dollar Buoyed by Safe Haven Demand
The US Dollar remained in a position of strength yesterday as investors continued to flock to the safe-haven US currency on concerns of escalating US-China trade tensions. While US President Trump offered some relief to investors yesterday when he tweeted that Chinese Vice-Premier Liu Hi was heading to Washington to ‘make a deal’, the mood in markets remained broadly risk-off.
Looking ahead, the current US-China trade tensions are likely to colour the reaction to the latest US trade figures, with another rise in the domestic trade deficit potentially giving more ammunition to Trump in his war of words with Beijing.
Canadian Dollar Steady despite Plunging Oil Prices
The Canadian Dollar was left adrift in trade on Wednesday, with demand for the ‘Loonie’ tempered by trade jitters as well as sharply falling oil prices.
The publication of Canada’s latest trade balance later tonight may lend some support to CAD however, with economists forecasting the nation’s trade deficit will have narrowed in March.
New Zealand Dollar Stumbles as RBNZ cuts rates
The New Zealand Dollar fell back against most of its peers on Wednesday as markets digested the Reserve Bank of New Zealand’s decision to cut interest rates this month to a new record low in response to weak inflation and employment data.
Data Releases
May 9th 22:30 CAD Trade Balance (Mar) C$-2.45bn
May 9th 22:30 USD Trade Balance (Mar) $-50.2bn
May 9th 22:30 USD Fed Powell Speech