Australian Dollar (AUD) Accelerates in Upbeat Trade
The Australian Dollar (AUD) closed last week’s session on a positive note, with the risk-sensitive currency catching bids amid an upbeat market mood.
This uptick in the ‘Aussie’ was also supported by a robust retail sales print, with April’s figures boosting hopes that domestic economic growth will remain positive in the second quarter.
Looking ahead to this week, the focus for AUD investors will be on Australia’s latest GDP figures. Will a sharp slowing of growth in the first quarter prompt a pullback in AUD exchange rates?
New Zealand Dollar (NZD) Strengthened by Risk-On Flows
The New Zealand Dollar (NZD) also benefited from the bullish market mood on Friday, with the ‘Kiwi’ able to recoup a good portion of its losses from the middle of last week.
In the absence of any notable NZD data, the direction of the New Zealand Dollar is likely to remain wedded to market sentiment at the start of this week.
Pound (GBP) Steady as Markets Digest Fiscal Stimulus
The Pound (GBP) traded in a narrow range at the end of last week. Sterling was supported by hopes the UK may avoid a recession this year thanks to the UK’s new fiscal stimulus package.
However, the upside in GBP exchange rates proved limited as ongoing Brexit uncertainty left investors reluctant to make any aggressive bets.
With GBP data thin on the ground and UK trade facing a truncated week of trade due to the extended Jubilee weekend, trade in the Pound may be thin in the coming days potentially leading Sterling exposed to its peers.
Euro (EUR) Dented by Energy Concerns
The Euro (EUR) was subdued on Friday as renewed concerns over European energy security undermined the single currency.
This followed reports that the EU was pushing forward with a plan to ban Russian oil exports, with hopes that an exclusion for pipeline flows would help win support from Hungary.
Looking ahead, the Euro could face pressure later this evening as the Eurozone’s economic sentiment index is expected to report another drop in investor morale in May.
US Dollar (USD) Weakened as US Treasury Yields Fall
The US Dollar (USD) trended lower at the end of last week, undermined by a fall in US Treasury yields and a prevailing risk-on mood.
These losses were then reinforced by a slide in April’s core PCE price index, as the drop in the Federal Reserve’s preferred indicator for inflation stoked speculation the Fed might pause its tightening cycle later in the year.
If a risk-on mood continues to persist it’s likely the US dollar might extend its losses at the start of this week, particularly as US markets are closed today for Memorial Day.
Canadian Dollar (CAD) Firms despite Dip in Oil Prices
The Canadian Dollar (CAD) maintained a positive trajectory on Friday, with CAD investors seeming shrugging off a modest pullback in oil prices.
Looking ahead, the focus for CAD investors in the first half of this week will be Canada’s GDP release, with the ‘Loonie’ likely to accelerate if growth remained robust in the first quarter as expected.
Data Releases
May 30th 19:00 EUR Economic Sentiment (May) 104.9
May 30th 22:00 EUR German Inflation Rate (May) 7.6%