Australian Dollar (AUD) Plummets as RBA Leaves Rates Unchanged
The Australian Dollar (AUD) tumbled in the aftermath of the Reserve Bank of Australia’s (RBA) interest rate decision yesterday. The RBA chose to leave interest rates unchanged at 3.6%.
A nearly 3% drop in iron ore prices deepened losses for AUD, although the risk-sensitive ‘Aussie’ was cushioned by a risk-on mood.
AUD could come under renewed pressure today if RBA Governor Philip Lowe gives any additional dovish signals.
New Zealand Dollar (NZD) Drops Due to AUD Correlation
A return of risk appetite did little to support the risk-sensitive New Zealand Dollar (NZD) on Tuesday. The ‘Kiwi’ was pulled lower by its positive correlation to the Australian Dollar.
NZD saw its losses curbed by bets on an interest rate increase from the Reserve Bank of New Zealand (RBNZ) at its meeting today.
The ‘Kiwi’ could recover lost ground if the RBNZ hikes rates and signals further policy tightening.
Pound (GBP) Bolstered by Bets on Additional BoE Rate Hikes
The Pound (GBP) climbed on Tuesday despite a lack of significant data. Markets are betting on a 25bps rate hike from the Bank of England (BoE) at its May meeting, and this seemed to lift GBP.
Optimism over the UK’s economic outlook also lent support to Sterling yesterday, as recent British data suggests resilience in the country’s economy.
Turning to today, the final reading of March’s services PMI is in focus. Could the score be revised lower, as the manufacturing PMI was earlier in the week, thereby denting the Pound?
Euro (EUR) Rallies amid USD Weakness
Evidence of a decline in consumer inflation expectations pressured the Euro (EUR) yesterday.
However, the single currency was eventually able to strengthen thanks to better-than-expected German trade data and the Euro’s negative correlation with the tumbling US Dollar (USD).
The Euro could gain ground today if the final printing of March’s services PMI confirms a strong expansion in the sector.
US Dollar (USD) Plunges following Jobs Data Miss
The US Dollar weakened on Tuesday. A positive risk tone weighed on the safe-haven ‘Greenback’.
USD lost further ground after the latest JOLTs job openings figure. Vacancies declined in February, pointing to some slack in the US labour market. This, in turn, dampened Federal Reserve rate hike expectations.
Negative performance in the US services sector could push USD lower if March’s ISM PMI softens as forecast.
Canadian Dollar (CAD) Firms as Oil Prices Continue Rally
The commodity-linked Canadian Dollar (CAD) found support from an extended rally in oil prices yesterday. However, gains for the ‘Loonie’ were limited amid a weaker US Dollar.
CAD could consolidate its gains today if oil prices continue their upward trend.
Apr 5th 12:00 NZD RBNZ Interest Rate Decision 5%
Apr 5th 12:30 AUD RBA Gov Lowe Speech
Apr 5th 16:00 EUR German Factory Orders 0.3%
Apr 5th 18:00 EUR S&P Global Services PMI (Mar) 55.6
Apr 5th 18:30 GBP S&P Global/CIPS UK Services PMI (Mar) 52.8
Apr 6th 00:00 USD ISM Non-Manufacturing PMI (Mar) 54.5