Australian Dollar (AUD) Falls on Risk-Off Headwinds
The Australian Dollar (AUD) traded in a wide range yesterday amid fluctuating market risk appetite.
Elsewhere the ‘Aussie’ initial gains on the back of the minutes from the Reserve Bank of Australia’s (RBA) June meeting were reversed in the wake of cautious comments from RBA Governor Philip Lowe.
Today, a lack of significant data leaves AUD to trade on external factors. If risk sentiment remains subdued, the ‘Aussie’ may weaken.
New Zealand Dollar (NZD) Subdued Ahead of Trade Balance Release
The New Zealand Dollar (NZD) also fluctuated on Tuesday on the back of the swings in market risk sentiment.
Today, New Zealand’s trade data is likely to decide ‘Kiwi’ movement: if the country’s surplus declines as expected, the New Zealand Dollar may continue weakening.
Pound (GBP) Trades Mixed on Inflation Fears
The Pound (GBP) initially strengthened on Tuesday, buoyed by comments from Bank of England (BoE) policymaker Huw Pill.
However Sterling was unable to sustain these gains for long, with concerns over the impact of rail strikes in the UK weighing on sentiment.
The UK’s consumer price index is expected to report domestic inflation climbed to 9.1% last month. Will this reignite concerns over the UK’s cost of living crisis and weaken the Pound?
Euro (EUR) Firms Overall on Hawkish ECB
The Euro (EUR) continued to trend higher yesterday, supported by the European Central Bank (ECB)’s recently hawkish outlook.
ECB President Christine Lagarde reiterated earlier in the week that the bank intends to raise interest in both July and September.
Also buoying the single currency was downside in the US Dollar (USD), which has a strong negative correlation with EUR.
Early tomorrow, Europe’s consumer confidence flash is expected to improve upon May’s -21.1. If the data creeps closer to a positive figure, the Euro may extend its gains.
US Dollar (USD) Faces Fears of Recession
The US Dollar (USD) sank overall on Tuesday as readings of US economic activity were mixed.
It is unclear whether economic growth is slowing significantly in response to higher interest rates, but several economists predict a recession in the near term. Supporting such predictions, US consumer confidence, retail sales, manufacturing and housing activity are all slowing while inflation rises sharply.
Federal Reserve Chairman Jerome Powell begins his testimony to the US Congress today: if Powell outlines thorough plans to mitigate the risks of a recession, the ‘Greenback’ could reverse its losses.
Canadian Dollar (CAD) Gains on Strong Retail Data
The Canadian Dollar (CAD) firmed overall yesterday, buoyed by better-than-expected retail data and rising oil prices.
Today, Canadian inflation data is likely to affect CAD trading: if Canada’s CPI increases to 7.4% as forecast, the ‘Loonie’ could enjoy tailwinds on hopes of tightening monetary policy.
Data Releases
Jun 22nd 08:45 NZD Balance of Trade (May) NZ$328m
Jun 22nd 16:00 GBP Inflation Rate (May) 9.1%
Jun 22nd 17:00 EUR ECB Non-Monetary Policy Meeting N/A
Jun 22nd 22:30 CAD Inflation Rate (May) 7.4%
Jun 22nd 23:30 USD Fed Chairman Powell Testimony N/A
Jun 23rd 00:00 EUR Consumer Confidence Flash (Jun) -20.5
Jun 23rd 02:30 USD Fed Evans Speech N/A
Jun 23rd 03:30 USD Fed Harker Speech N/A
Jun 23rd 03:30 USD Fed Barkin Speech N/A