Australian dollar (AUD) roars higher amid US-Iran peace hopes
The Australian dollar (AUD) surged yesterday, hitting its highest level against the US dollar (USD) since May 2022, as the US indicated it was close to an agreement to end the war with Iran.
The resulting risk-on mood propelled AUD higher. However, Iran pushed back on these reports later in the session, with the Australian dollar subsequently trimming its gains.
Australia’s latest trade figures could dent AUD today, if they report the country’s trade surplus narrowed in March. However, the ‘Aussie’ may enjoy support if the risk-on market mood prevails.
New Zealand dollar (NZD) jumps amid upbeat trade
The New Zealand dollar (NZD) soared to multi-month highs yesterday thanks to market optimism and an unexpected decline in New Zealand unemployment in the first quarter.
Domestic data is thin on the ground for NZD today, likely leaving the ‘kiwi’ to trade on risk appetite. If markets remain optimistic about an end to the US-Iran war, the New Zealand dollar may strengthen.
Pound (GBP) mixed despite upbeat PMI
The pound (GBP) traded without a clear trajectory yesterday, as mixed factors saw Sterling trade in a wide range.
Although a slight upward revision to the UK’s final services PMI for April supported the pound, political uncertainty ahead of the closely watched local elections pressured GBP.
Today’s elections are undoubtedly the key focus for GBP investors. If worries about political uncertainty in the UK see government bond yields tick higher, this may reflect poorly on the pound.
Euro (EUR) buoyed by USD decline
The euro (EUR) rose against its weaker peers yesterday as EUR enjoyed its strong negative correlation with the tumbling US dollar.
However, the safer euro struggled against risk-sensitive currencies amid the upbeat market mood, while a contraction in Eurozone private sector activity also stifled EUR’s potential.
The single currency may struggle for direction today, as forecasters expect the latest Eurozone economic data to paint a mixed picture. Any hawkish comments from European Central Bank (ECB) policymakers could underpin the euro, with three officials due to speak today.
US dollar (USD) plummets amid Middle East optimism
The safe-haven US dollar slumped yesterday after President Donald Trump hailed ‘great progress’ on reaching a ‘final agreement’ with Iran, as these comments saw a surge in market risk appetite.
The ‘greenback’ managed to bounce off its worst levels in the evening thanks to dip-buying and better-than-expected US jobs data, although the currency remained lower overall.
A forecast rise in jobless claims last week could dent USD later today. Meanwhile, market risk appetite will likely remain a key driver. If the mood stays upbeat, the ‘greenback’ could remain on the defensive.
Canadian dollar (CAD) crumbles as oil prices plunge
The crude-linked Canadian dollar (CAD) faced broad selling pressure yesterday as hopes for a diplomatic breakthrough in the US-Iran conflict saw oil prices tumble.
With Canadian data thin on the ground today, crude prices could continue to drive CAD movement. If hopes for peace continue to undermine oil prices, the ‘loonie’ could soften.
Data releases
11:30 AUD Balance of Trade (Mar)
16:00 EUR German Factory Orders (Mar)
19:00 EUR Retail Sales (Mar)
22:30 USD Initial Jobless Claims (02/May)