Australian Dollar Buoyed by RBA Outlook
The Australian Dollar (AUD) enjoyed broad gains on Tuesday. AUD investors cheered as the Reserve Bank of Australia (RBA) signalled little appetite for further rate cuts following its August policy meeting. Adding further support to the ‘Aussie’ was the publication of the latest domestic trade balance data as Australia posted a record trade surplus in June.
This bullish attitude towards the ‘Aussie’ may not last for long however, as a risk-off mood continues to dominate markets in the face of rising US-China trade tensions.
Lull in Political Headlines Prompts Uptick in Pound Sterling (GBP)
The Pound (GBP) traded robustly throughout yesterday’s session as the absence of any negative Brexit headlines saw some investors willing to take out some bullish bets on the UK currency. This was aided by comments from a Downing Street spokesperson who stated that Boris Johnson still wants to negotiate a deal.
However, Sterling may struggle to record further gains as the growing risk of a no-deal Brexit continues to cast a long shadow.
Euro Retreats despite Upbeat German Data
After soaring at the start of the week a market correction saw the Euro (EUR) relinquish a large portion of these gains on Tuesday.
The slump in the Euro came in spite of some upbeat German industrial data which revealed a stronger-than-expected rebound in domestic factory order growth in June.
This downtrend in the single currency looks likely to persist through today’s session as well, with data to be published later this afternoon expected to show that German industrial production contracted again in at the end of the second quarter.
US Dollar Muted on Fed Rate Cut Expectations
The US Dollar (USD) struggled to find support yesterday amid renewed speculation of multiple rate cuts from the Federal Reserve this year. With the US-China trade dispute heating up again and the Fed becoming increasingly sensitive to the risks posed to the US economy, analysts at Goldman Sachs have forecast that we may see two more cuts from the US central bank this year.
USD investors will be looking to Charles L. Evans to see if the Federal Open Market Committee (FOMC) member offers any support to this hypothesis.
Canadian Dollar Struggles as Oil Falls to $59 a Barrel
The Canadian Dollar (CAD) traded in a narrow range on Tuesday as the ‘Loonie’ was undermined by both rising trade tensions and another slump in oil prices, which saw Brent crude fall to a new seven-month low.
New Zealand Dollar Weakens ahead of RBNZ Rate Cut
The New Zealand Dollar (NZD) faces broad losses on Tuesday as markets grow increasingly wary of the ‘Kiwi’ ahead of a widely expected rate cut from the Reserve Bank of New Zealand (RBNZ).
The RBNZ’s rate decision is likely to dominate NZD exchange rates today, with the New Zealand Dollar expected to fall further if the bank signals that it is open to further monetary easing.
Data Releases
August 7th 08:30 AUD Construction Index 44
August 7th 12:00 NZD RBNZ Rate Decision 1.25%
August 7th 16:00 EUR German Industrial Production -0.4%
August 7th 17:30 GBP Halifax House Price Index 0.3%
August 7th 23:30 USD Fed Evans Speech