Australian Dollar (AUD) Buoyed by Risk-On Support
The Australian Dollar (AUD) rose against the majority of its peers at the beginning of the week, as a risk-on mood lent support to the currency.
This upbeat mood came amid the reopening of several cities in China following the country’s Covid outbreak.
Looking ahead, today’s interest rate decision from the Reserve Bank of Australia (RBA) could spark some notable volatility in the ‘Aussie’ as analysts are split over how aggressively the bank will hike interest rates.
New Zealand Dollar (NZD) Wavers on Lack of Significant Data
The New Zealand Dollar (NZD) trended in a narrow range on Monday as a lack of significant domestic data left the currency to trade on external factors.
Capping the currency’s losses was strength in the ‘Kiwi’s sister currency: the Australian Dollar. Furthermore, risk-on trading lent NZD tailwinds.
Today, the New Zealand Dollar could trade according to Australia’s interest rate outcome. If the RBA hikes rates as expected, AUD is likely to climb and may boost the ‘Kiwi’.
Pound (GBP) Firms as Political Optimism Prevails
The Pound (GBP) enjoyed tailwinds against its peers yesterday in spite of a lack of data, as a confidence vote was triggered pertaining to Prime Minister Boris Johnson’s leadership.
GBP investors were confident that Johnson would win the vote and that the event will allow parliament to put the ‘Partygate’ scandal behind them and focus on world issues.
Meanwhile, the British Retail Consortium (BRC) will release its findings on UK retail sales today which could trigger GBP downside if sales fell in May as expected.
Euro (EUR) Fluctuates Leading Up to ECB Decision
The Euro (EUR) succumbed to losses against several rival currencies at the beginning of the week despite a strong risk appetite and downside in the US Dollar (USD).
Ahead of the European Central Bank (ECB)’s interest rate decision on Thursday, investors were hesitant to place bullish bets: the central bank is expected to keep interest on hold for now but announce a July lift-off.
If German factory orders increase today as expected, the single currency may enjoy some support; increased German construction activity in May could also inspire upside.
US Dollar (USD) Sinks on Upbeat Market Mood
The US Dollar tumbled through Monday’s session as risk-on trading drew support away from safe-haven currencies.
Following the rebound at the end of last week, the ‘Greenback’ relinquished its gains amid prospects of a quiet session, with Friday’s interest rate decision in the spotlight.
Ahead of that event, April’s US trade deficit is expected to have shrunk to $-89.5bn from $-109.8bn, potentially lending support to the US Dollar.
Canadian Dollar (CAD) Trades Mixed as Crude Oil Rises
The Canadian Dollar (CAD) strengthened against several peers yesterday as crude oil prices trended higher. Analysts consider that further increases are likely in the near term.
Today’s trade balance is expected to reveal an increase in Canada’s trade surplus, possibly lending further support to CAD exchange rates.
Data Releases
Jun 7th 08:30 AUD Ai Group Services PMI (May) 57
Jun 7th 09:01 GBP BRC Retail Sales Monitor (May) -1%
Jun 7th 14:30 AUD RBA Interest Rate Decision 0.6%
Jun 7th 16:00 EUR German Factory Orders (Apr) 0.3%
Jun 7th 17:30 EUR German S&P Global Construction PMI (May) 47.2
Jun 7th 18:30 GBP S&P Global/CIPS UK Services PMI Final (May) 51.8
Jun 7th 22:30 CAD Balance of Trade (Apr) C$2.9bn
Jun 7th 22:30 USD Balance of Trade (Apr) $-89.5bn
Jun 8th 00:00 CAD Ivey PMI s.a. (May) 54