Australian Dollar (AUD) Wavers on Mixed Trading Stimuli
The Australian Dollar (AUD) fluctuated on Tuesday as weaker-than-expected PMI data weighed upon the currency while a hawkish Reserve Bank of Australia (RBA) tempered these losses.
Following the RBA’s larger-than-expected rate hike earlier this month, the central bank is expected to maintain its hawkish stance despite comments it has no plans to sell bonds from its portfolio.
Today’s speech from assistant governor Luci Ellis may justify markets’ optimism – if Ellis strikes an upbeat tone, AUD could climb against its peers.
New Zealand Dollar (NZD) Trades Sideways ahead of RBNZ Decision
The New Zealand Dollar (NZD) traded in a narrow range against its rivals yesterday as investors were cautious of placing bets ahead of the Reserve Bank of New Zealand (RBNZ)’s interest rate decision.
New Zealand’s central bank is expected to hike rates by 0.5% today, prompting some recession fears as markets anticipate a decline in consumer spending. NZD morale faces headwinds due to higher energy bills and commodity prices, which are affecting the pay checks of households.
Into today, the ‘Kiwi’ may fall on aggressive tightening measures – although any losses could be mitigated if the central bank unveils a plan to tackle the rising cost of living.
Pound (GBP) Plummets on PMIs, Brexit, BoE Headwinds
The Pound (GBP) came under pressure yesterday as the UK’s manufacturing and services PMIs printed below expectations, minimising the chances of an imminent rate hike from the Bank of England (BoE).
Reaffirming the central bank’s gloomy economic outlook, the data added to weak Sterling sentiment triggered by rumours that Britain would take unilateral action against the Northern Ireland protocol.
A lack of UK data leaves Sterling to trade on external factors today – if the overall market mood remains risk averse, GBP could sink.
Euro (EUR) Fluctuates on Mixed PMI Data
The Euro (EUR) traded sideways against its peers on Tuesday, as Euro area PMIs revealed slowing growth in manufacturing and service-sector activity.
In Germany, however, manufacturing activity exceeded forecasts, printing at 54.7 rather than the 54 forecast. Also lending EUR tailwinds were upbeat comments from the European Central Bank ECB’s Robert Holzmann, who remarked that a 50 bps rate hike in July would be appropriate.
A speech from ECB President Christine Lagarde could dampen support for the single currency today, however, is she plays down the chances of an aggressive rate hike.
US Dollar (USD) Subdued by Weak Services Growth
The US Dollar (USD) weakened against several peers yesterday as May’s flash PMI estimates printed mixed.
While manufacturing growth met forecasts of 57.5, service-sector activity grew at a slower pace of 53.5 and below expectations of 55.2. Nevertheless, the ‘Greenback’ retained some support on account of a widespread risk-off mood.
Looking ahead, April’s durable goods orders are predicted to have increased by 0.6% – if the data prints as expected, USD may enjoy some support.
Canadian Dollar (CAD) Sinks on Fears of Economic Slowdown
The Canadian Dollar (CAD) fell overall on Tuesday despite some recovery in crude oil prices. It may be that fears of a global recession dent industrial growth prospects, threatening oil demand ahead.
Data Releases
May 25th 09:45 AUD RBA Ellis Speech N/A
May 25th 11:30 AUD Construction Work Done (Q1) 1%
May 25th 12:00 NZD RBNZ Interest Rate Decision 2%
May 25th 16:00 EUR German Gfk Consumer Confidence -26
May 25th 16:00 EUR German GDP Growth Rate Final (Q1) 0.2%
May 25th 18:00 EUR ECB President Lagarde Speech N/A
May 25th 22:30 USD Durable Goods Orders (Apr) 0.6%
May 26th 02:30 USD Fed Brainard Speech N/A
May 26th 04:00 USD FOMC Minutes N/A