Australian Dollar (AUD) Struggles despite US-China ‘Constructive Dialogue’
The Australian Dollar (AUD) struggled to make gains during Tuesday’s session despite increased risk appetite following a phone call between Chinese and United States officials which was declared a success.
The United States and China have reaffirmed their commitment to the Phase 1 trade deal, which has seen Beijing slacking on obligations to buy US goods. China’s commerce ministry confirmed the two sides had a ‘constructive dialogue’, although this was not enough to boost the riskier AUD.
Looking ahead, the ‘Aussie’ could slump following the release of the second quarter construction work done data, which is expected to plummet in the three months to June.
Pound (GBP) Boosted by Upbeat Sentiment as Traders Shrug Off Dire Retail Sales Data
The Pound (GBP) made gains during Tuesday’s session as traders shrugged off the unexpected fall in Britain’s retail sales from the Confederation of British Industry.
GBP rose despite the CBI’s data revealing job changes tumbled to the lowest level since February 2009. However, the Pound also received support after reports of a successful phone call between top officials from Beijing and Washington. The boost in risk appetite largely drove the currency during yesterday’s session.
Looking ahead, Sterling traders will remain focused on the upcoming Bank of England (BoE) speeches as markets await for hints on whether the bank is considering sending rates into negative territory.
Euro (EUR) Boosted by Jump in German Business Sentiment
The Euro (EUR) rose against the US Dollar, but fell against GBP and remained muted against a handful of other currencies.
The single currency received some support during Tuesday’s session from better-than-expected German data. While Germany’s economic slump was the steepest decline since the country began to record GDP growth, the latest business morale data improved, boosting economic rebound hopes.
The single currency could be boosted if the latest French consumer confidence data improves more than forecast. Added to this, if separate data shows the number or people registered as unemployed in mainland France falls for the fourth consecutive month, it will buoy EUR.
US Dollar (USD) Slides on ‘Constructive’ US-China Phone Call
The US Dollar (USD) slumped against a handful of currencies during yesterday’s session as risk appetite improved and sent traders flocking away from the safe-haven Dollar.
The call between US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, with China’s Vice Premier Liu He, was originally scheduled for 15 August. Washington said that both sides ‘see progress’ while Beijing’s commerce ministry labelled the phone call ‘constructive’, which buoyed risk appetite and sent USD lower.
Meanwhile, the Dollar could be offered some support if the latest US durable goods orders rise more than expected in July, showing further signs of an economic recovery in the world’s largest economy.
Canadian Dollar (CAD) Supported as Storm Laura Sparks Major Production Cuts
The Canadian Dollar (CAD) struggled against the majority of its rivals, but made some gains against a weaker US Dollar as risk appetite improved.
The oil-sensitive ‘Loonie’ ticked higher as crude oil prices were supported after Tropical Storm Laura on the US Gulf Coast is forecast to become a major hurricane which sparked further production cuts. However, rising coronavirus cases in Europe and Asia capped these gains and left CAD flat.
The riskier ‘Loonie’ could struggle during today’s session if the latest speech from the Bank of Canada’s (BoC) Senior Deputy Governor, Carolyn Wilkins is overly dovish.
New Zealand Dollar (NZD) Flat as Coronavirus Cases Rise across Asia and Europe
The New Zealand Dollar (NZD) was flat against a handful of currencies, slumping against Sterling and trending higher against a weaker US Dollar.
While the latest reports on the US-China trade deal supported the ‘Kiwi’, gains were limited as the number of coronavirus cases continued to rise across Asia and Europe.
Meanwhile, NZD will struggle during today’s session if the latest trade balance data disappoints investors as July’s data is expected to show exports declined.
Upcoming Data
08:45 NZD Balance of Trade (Jul) N$100M
11:30 AUD Construction of Work Done (Q2) -5.5%
16:45 EUR France Consumer Confidence (Aug) 96
20:00 EUR France Unemployment Benefits Claims (Jul) -70.7K
22:30 USD Durable Goods Orders (Jul) 3.9%
27/08/2020
00:00 CAD BoC Wilkins Speech