Australian Dollar Skyrockets as RBA Surprises with Hawkish Hike

Australian Dollar (AUD) Surges as RBA Surprises with 25bps Hike

The Australian Dollar (AUD) leaped on Tuesday after the Reserve Bank of Australia (RBA) surprised markets with a 25bps interest rate rise.

The central bank also signalled that further rate hikes may be necessary in the coming months.

Turning to today, the Australian Dollar could see more gains if March’s retail sales improve as forecast. However, a continued risk-off mood could dent confidence in AUD.

New Zealand Dollar (NZD) Bolstered by Strong Australian Dollar

The New Zealand Dollar (NZD) benefitted from its positive correlation to the Australian Dollar yesterday.

On the other hand, a pullback in risk appetite and a downbeat mood in the commodity markets capped NZD’s gains.

Looking ahead, an expected uptick in New Zealand’s first quarter unemployment rate could weigh on the ‘Kiwi’ today.

Pound (GBP) Slips as Manufacturing Output Stumbles

Confirmation of a contraction in manufacturing sector output pulled the Pound (GBP) lower yesterday. The final reading of April’s manufacturing PMI showed a fall to a three-month low of 47.8.

The data also pointed to easing cost pressures in the sector, which weakened Bank of England (BoE) rate hike bets and GBP exchange rates.

Amid a lack of GBP data today, the Pound could remain muted.

Euro (EUR) Wobbles following Inflation Data

The Euro (EUR) struggled yesterday, only managing to rise against its weaker peers, as investors responded to the Eurozone’s latest consumer price index.

While headline inflation rose, the core rate unexpectedly ticked lower. Markets now expect the European Central Bank (ECB) to continue raising interest rates, although perhaps at a slower pace.

EUR could see a boost today if March’s unemployment rate remains unchanged at the record low of 6.6.%.

US Dollar (USD) Upside Capped as Labour Market Cools

A larger-than-forecast drop in March’s job openings stymied the US Dollar’s (USD) gains on Wednesday. The evidence of a cooler labour market added to speculation that the Federal Reserve may soon end its policy tightening cycle.

The safe-haven ‘Greenback’ was supported by a retreat in global risk appetite, however.

Investors will be keenly awaiting the Fed’s interest rate decision tomorrow morning. Before then, we have the latest PMI report. Could an ongoing recovery in the US services sector boost USD?

Canadian Dollar (CAD) Plummets as Oil Prices Slide

The commodity-linked Canadian Dollar (CAD) declined yesterday amid tumbling oil prices. The value of crude slumped amid concerns over rising interest rates and reduced demand.

The ‘Loonie’ could see deeper losses today if oil prices decline further.

May 3rd 07:00    NZD       RBNZ Financial Stability Report

May 3rd 08:45    NZD       Unemployment Rate (Q1)            3.5%

May 3rd 11:30    AUD       Retail Sales MoM Prel (Mar)        0.3%

May 3rd 19:00    EUR        Unemployment Rate (Mar)         6.6%

May 4th 00:00    USD       ISM Services PMI (Apr)  51.8

May 4th 04:00    USD       Fed Interest Rate Decision            5.25%


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