Australian Dollar (AUD) Wavers on Lack of Significant Data
The Australian Dollar (AUD) traded in a mixed range midweek, as a lack of notable domestic data left the currency exposed to shifts in risk sentiment.
The market mood wavered as investors mulled the mixed global economic outlook. While the US economy seems strong and China is emerging from damaging lockdowns, many European economies are facing recession risks.
Looking ahead, Australia’s latest jobs report may inspire AUD tailwinds this morning: unemployment looks to have fallen to 3.9% in April while the number of employed persons is expected to increase by 30,000.
New Zealand Dollar (NZD) Subdued as Commodities Fall
The New Zealand Dollar (NZD) was also muted on Wednesday, as a lack of NZ data exposed the ‘Kiwi’ to external headwinds.
Milk – the country’s largest export – trended lower in value, exerting downside pressure. Meanwhile, the shifting market mood saw the riskier ‘Kiwi’ wobble.
Turning to today, a continued lack of notable New Zealand data could leave NZD exchange rates to trade primarily on risk sentiment.
Pound (GBP) Slumps as Inflation Reaches Dizzying Heights
The Pound (GBP) crashed against the majority of its peers yesterday as the UK’s CPI report revealed an inflation rate of 9% for the month of April.
Although marginally lower than expected, the data worried markets. While fears of a recession prevent aggressive tightening action from the Bank of England (BoE), the UK’s poorest households are facing double-digit inflation on essential items such as food.
According to the Confederation of British Industry (CBI), industrial trends orders are expected to have increased to 17 in May; if the data prints as forecast, Sterling may firm today.
Euro (EUR) Trends Sideways on Euro Area Inflation
The Euro (EUR) faced headwinds midweek as the Euro area’s finalised CPI reading remained high, albeit slightly below initial estimates.
Painfully high inflation rates were recorded in Estonia (19.1%), Lithuania (16.6%) and Czechia (13.2%), prompting the Hungarian prime minister, Viktor Orban, to raise the alarm over an ‘era of recession’ in Europe.
Today’s monetary policy meeting accounts from the European Central Bank (ECB) may shed more light on the central bank’s forward guidance. So far, the commentary has been mixed, but a hawkish tone may boost EUR.
US Dollar (USD) Buoyed by Powell Speech and Treasury Yields
The US Dollar (USD) found support on Wednesday from comments made the evening before by Federal Reserve Chairman Jerome Powell.
Powell assured investors that the Fed remains focused on tackling inflation and will not hesitate to move rates above the 2.5% area if required. Moreover, rising US Treasury bond yields bolstered USD sentiment through the European session.
US jobs data may inspire upside movement today: initial jobless claims are expected to remain low. On the other hand, manufacturing activity looks to have slumped.
Canadian Dollar (CAD) Uptrend Proves Short-Lived
The Canadian Dollar (CAD) experienced brief tailwinds yesterday following a hotter-than-expected inflation reading. April’s data strongly supports the case for rapid tightening from the Bank of Canada (BoC) in the coming quarters.
However, the data was unable to trigger a lasting upside as crude prices wavered, which weighed on the commodity-linked ‘Loonie’.
Data Releases
May 19th 11:30 AUD Unemployment Rate (Apr) 3.9%
May 19th 11:30 AUD Employment Change (Apr) 30,000
May 19th 20:00 GBP CBI Industrial Trends Orders (May) 17
May 19th 21:30 EUR ECB Monetary Policy Meeting Accounts N/A
May 19th 22:30 USD Philadelphia Fed Manufacturing Index (May) 16
May 19th 22:30 USD Initial Jobless Claims (14/May) 200,000