Australian Dollar (AUD) Falls on Economic Growth Concerns
The Australian Dollar (AUD) trended down on Tuesday following the Reserve Bank of Australia (RBA)’s decision to raise interest rates to 1.35%.
The hike was AUD negative due to recession concerns, given unsteady economic growth across global economies, investors are worried that aggressive rate hikes will trigger a recession. Moreover, household budgets are under pressure from higher prices and higher interest rates.
Today, the publication of the RBA’s chart pack may shed further light upon the central bank’s domestic economic outlook. If the release is hawkish, AUD may climb.
New Zealand Dollar (NZD) Trades Mixed as Commodities Fall
The New Zealand Dollar (NZD) wavered against its peers yesterday, as market sentiment weakened and the country’s key exports fell in value.
A lack of data leaves the ‘Kiwi’ to trade on external factors today: if trading sentiment remains bearish, NZD could dip.
Pound (GBP) Sentiment Dented by Downbeat BoE Report
The Pound (GBP) dropped against several of its rival currencies on Tuesday as the Bank of England (BoE)’s financial stability review struck a downbeat tone.
The report warned that global economic conditions have worsened and consequently the outlook is very uncertain; equity markets are also expected to remain volatile as household finances will likely become more stretched.
Additional speeches from BoE policymakers may elaborate further on the central bank’s outlook today – if chief economist Huw Pill strikes a downbeat tone, Sterling may tumble further.
Euro (EUR) Battered by USD Strength
The Euro (EUR) slumped yesterday as market mood weakened and strength in the US Dollar weighed upon the single currency.
June’s finalised PMI revealed that services activity expanded by more than expected in the Euro area; EUR was unable to climb, however, as fears of a recession capped gains. Data from the German Retail Association exacerbated concerns, forecasting a 2% contraction in sector growth in real terms.
Today, German factory orders could dent Euro trading if they fell in May as expected. Elsewhere, rising retail sales in the Euro area may lend support to the single currency.
US Dollar (USD) Surges in Skittish Trade
The US Dollar (USD) soared yesterday, with investors favouring the safe-haven currency amidst considerable risk-off flows.
Also buoying USD exchange rates was the release of the latest US factory order figures. New orders jumped 1.6%, following an upwardly revised 0.7% rise in April and above expectations of 0.5%. Also buoying the ‘Greenback’ was a risk-off market mood.
June’s ISM non-manufacturing PMI may affect USD today, lending possible support if it prints above expectations.
Canadian Dollar (CAD) Trades Mixed as Crude Oil Falls
The Canadian Dollar (CAD) fluctuated through yesterday’s session, as crude oil prices softened.
Potentially capping losses were expectations that the Bank of Canada (BoC) will hike interest rates by 75bps at its next meeting on 13 July.
Data Releases
Jul 6th 16:00 EUR German Factory Orders (May) -0.6%
Jul 6th 17:00 EUR ECB Non-Monetary Policy Meeting N/A
Jul 6th 17:30 EUR German S&P Global Construction PMI (Jun) 46.2
Jul 6th 18:10 GBP BoE Pill Speech N/A
Jul 6th 19:00 EUR Retail Sales (May) 0.4%
Jul 6th 22:30 GBP BoE Cunliffe Speech N/A
Jul 6th 23:00 USD Fed Williams Speech N/A
Jul 6th 23:45 GBP S&P Global Services PMI Final (Jun) 51.6
Jul 7th 00:00 USD ISM Non-manufacturing PMI (Jun) 54.3
Jul 7th 00:00 USD JOLTs Job Openings (May) 11m
Jul 7th 04:00 USD FOMC Minutes N/A