Australian Dollar Steady as Markets Take Stock of US Tariffs
Despite the decision by the US to press on with its tariff hikes against China, the Australian Dollar still held its ground on Friday. This appeared to be in part due to the fact that negotiations are ongoing, with tariffs only targeting new shipments, providing a window before they start to really have an impact.
However the ‘Aussie’s’ fortunes this week will be tied to how the negotiations progress, with a breakdown in talks likely to sink AUD exchange rates.
Pound Struggles despite Strong GDP Figures
The Pound was left to trade in a narrow range at the end of last week’s session, despite the UK’s GDP figures showing a strong upswing in growth in the first quarter of 2019. Fuelling this lacklustre response were warnings from analysts that the uptick in growth was likely to prove temporary as businesses get through the stocks they built up ahead of Brexit.
Looking to the week ahead, we may see the Pound attempt to rally if the UK’s latest employment figures reveal the recent uptick in wage growth carried through into March.
Euro Muted as Eurozone Trade Concerns Mount
The Euro was flat on Friday as EUR investors remained wary of the escalation in the US-China trade tensions. While not directly impacting the Eurozone, the rise in tensions came as a stark reminder that Donald Trump has also set his sights on levelling the US trade deficit with the bloc.
Coming up this week, we have the publication of Germany’s latest GDP figures, with a return to growth for the Eurozone’s largest economy likely to lift the Euro.
US Dollar Undermined as Inflation Misses
The US Dollar drifted lower at the end of last week’s session, aided by a softer-than-expected US inflation reading in April. US headline CPI was reported to have climbed from 1.9% to 2% in April, missing forecasts that it would rise to 2.1%. This failed to dispel concerns that lacklustre price growth could still press the Federal Reserve to lower rates this year.
However this week could see the US Dollar mount a recovery if trade tensions between the US and China continue to escalate.
Canadian Dollar Buoyed by Bumper Employment Figures
The Canadian Dollar enjoyed broad gains overnight on Friday, with investors flocking to the ‘Loonie’ after Canada reported that domestic employment rocketed by over 100,000 in April, the largest gain on record.
New Zealand Dollar Stable as US-China Trade Tensions Rise
Finally, the New Zealand Dollar traded in a similar pattern to the Australian Dollar on Friday, with the ‘Kiwi’ holding its ground as markets digested the latest developments in the US-China trade dispute.
Data Releases
May 13th 11:30 AUD Home Loans (Mar) 0.4%