Australian dollar (AUD) dented by RBA decision
The Australian dollar (AUD) initially stumbled yesterday as the Reserve Bank of Australia (RBA) voted unanimously to leave interest rates unchanged and struck a fairly balanced tone.
However, the risk-sensitive ‘Aussie’ managed to regain ground in the evening thanks to a risk-on market mood.
Market risk appetite may be the defining factor for AUD today. If markets remain optimistic about the US-Iran peace deal and easing energy prices, the ‘Aussie’ could tick higher.
New Zealand dollar (NZD) see-saws as risk sentiment shifts
The New Zealand dollar (NZD) fluctuated yesterday, with NZD recovering from an initial fall as risk sentiment wavered.
A drop in New Zealand consumer confidence in the second quarter could weigh on NZD today. Elsewhere, risk appetite may impact the ‘kiwi’.
Pound (GBP) uncertain amid lack of data
The pound (GBP) traded in a wide range yesterday, with GBP struggling for direction amid a lack of UK economic data.
Sterling was also uncertain ahead of high-impact events later in the week, including fresh UK data, the Bank of England (BoE) decision, and the Makerfield by-election.
GBP investors will focus on the UK’s consumer price index today. A forecast modest rise in inflation may have little impact on the pound, while a stronger or weaker reading could boost or dent Sterling, respectively.
Euro (EUR) buoyed by strong German data
The euro (EUR) firmed against many of its peers yesterday thanks to stronger-than-expected German data.
Germany’s latest ZEW economic sentiment index rose from -10.2 to 10.5, beating forecasts for -6 to show its first positive reading since the outbreak of the US-Iran war in March.
Turning to today, European Central Bank (ECB) President Christine Lagarde is due to deliver a speech. Any hawkish remarks could underpin the euro.
US dollar (USD) rises and falls amid Middle East developments
The safe-haven US dollar (USD) initially ticked higher yesterday amid concerns that ongoing Israeli military action in Lebanon could threaten the US-Iran peace deal.
However, risk appetite improved in the evening, as some shipping activity resumed in the Strait of Hormuz. This saw the ‘greenback’ retrace its steps.
Looking ahead, the latest US retail sales figures could influence the ‘greenback’ today. Another month of robust sales growth could bolster USD.
Canadian dollar (CAD) pressured by falling oil prices
The commodity-linked Canadian dollar (CAD) slipped yesterday, touching an 11-day low against AUD and four-month lows against GBP and EUR, as crude prices continued to retreat.
With Canadian economic data thin on the ground today, oil price dynamics may continue to drive CAD. If crude extends its downside, the ‘loonie’ could weaken.
Data releases
07:00 NZD Westpac Consumer Confidence (Q2)
16:00 GBP Inflation Rate (May)
20:50 EUR ECB President Lagarde Speech
22:30 USD Retail Sales (May)