Australian Dollar (AUD) Supported by Recovering Risk Appetite
The Australian Dollar (AUD) strengthened on Tuesday, rising to a four-day high against the US Dollar (USD) on renewed risk appetite.
Investors’ confidence was boosted by hopes that inflation may be reaching its peak, forcing markets to scale back aggressive rate hike bets in some areas and quietening fears of a recession.
Today, May’s preliminary retail data may influence Australian Dollar exchange rates, potentially lending AUD a boost if predictions of a 0.4% rise in sales are confirmed.
New Zealand Dollar (NZD) Trades Mixed despite Rising Export Prices
The New Zealand Dollar (NZD) trended in a mixed range yesterday, despite rising commodity prices and strength in its antipodean cousin.
The ‘Kiwi’ may have been subdued by downbeat forecasts: researchers at one of New Zealand’s largest lenders said they ‘continue to see the NZD as vulnerable to further downside pressure in Q3.’
The New Zealand Dollar may trade on external factors today, given a lack of data – if risk appetite weakens, the ‘Kiwi’ could stumble.
Pound (GBP) Weakens on Brexit Dynamics, BoE Predictions
The Pound (GBP) retreated on Tuesday as the Northern Ireland Protocol Bill passed through the House of Commons earlier in the week.
Several backbenchers maintained that the bill risks a UK-EU trade war, which would inject significant volatility into Sterling. Applying additional pressure on GBP exchange rates were reduced Bank of England (BoE) rate hike bets.
Today, a speech from BoE Governor Andrew Bailey at the ECB’s Sintra Forum may affect trading, depending upon whether Bailey strikes a hawkish or a dovish tone.
Euro (EUR) Undermined by USD Gains
The Euro (EUR) struggled to attract support yesterday in spite of hawkish comments from European Central Bank (ECB) President Christine Lagarde on day 2 of the Sintra Forum.
Lagarde said ‘we will address every obstacle that may pose a threat to our price stability mandate’ and confirmed the possibility of an additional interest rate hike in September.
The single currency then stumbled overnight as its negative correlation with the US Dollar saw it fall as the latter rallied.
Lagarde is expected to speak again at the Forum today potential influencing EUR exchange rates. Elsewhere Germany will publish its latest CPI figures, with another uptick in inflation potentially buoying the
Euro.
US Dollar (USD) Rises in Tandem with US Treasury Yields
The US Dollar (USD) firmed on Tuesday, underpinned by a solid uptick in US Treasury yields.
This allowed the ‘Greenback’ to largely shrug off the upbeat market mood which dented other safe-haven currencies.
A speech today by Federal Reserve Chairman Jerome Powell could buoy USD further if he strikes a hawkish tone.
Canadian Dollar (CAD) Climbs on Crude Upside
The Canadian Dollar (CAD) broadly strengthened yesterday, boosted by rising crude oil prices.
At the 48th G7 summit in Austria, world leaders agreed to explore price caps on imports of Russian oil and gas, fuelling supply concerns.
Data Releases
29th Jun 11:30 AUD Retail Sales Prelim (May) 0.4%
29th Jun 19:00 EUR Economic Sentiment (Jun) 103
29th Jun 22:00 EUR German Inflation Rate Prelim (Jun) 8%
29th Jun 22:30 USD GDP Growth Rate Final (Q1) -1.5%
29th Jun 23:00 EUR ECB President Lagarde Speech N/A
29th Jun 23:00 GBP BoE Gov Bailey Speech N/A
29th Jun 23:00 USD Fed Chair Powell Speech N/A