Australian dollar (AUD) subdued following weak trade data
The Australian dollar (AUD) struggled against many of its peers yesterday in the wake of Australia’s latest trade figures.
A sharp slump in export growth saw Australia post an AU$-3.018bn deficit in May, its largest decline in over a decade.
Turning to today’s session, the ‘Aussie’ may remain muted if finalised PMI figures for June show that Australia’s service sector continued to contract through the end of the second quarter.
New Zealand dollar (NZD) fluctuates in uneven trade
Trade in the New Zealand dollar (NZD) was mixed yesterday, with the currency’s initial weakness being reversed overnight as a weaker US dollar (USD) helped revive risk appetite.
New Zealand’s latest consumer confidence index could prove support for the ‘kiwi’ this morning if it reports that sentiment continued to improve through June.
Pound (GBP) firms amid fading political risks
The pound (GBP) strengthened against the majority of its peers yesterday as investors, amid a continued reduction in the political risk premium that had been placed on Sterling in recent months.
This is supported by the near certainty that Andy Burnham will enter Downing Street unopposed and the confidence that he will govern within Labour’s existing fiscal framework.
Bank of England (BoE) Governor Andrew Bailey is scheduled to speak later today. Bailey suggested earlier this week that interest rate cuts are currently ‘off the table’. If he strikes a similarly hawkish note this evening, the pound may extend its gains.
Euro (EUR) bolstered by USD weakness
The euro (EUR) initially struggled yesterday amid a tempering of European Central Bank (ECB) rate hike bets.
However, the single currency then bounced back, aided in large part by its strong negative correlation with the US dollar.
EUR investors will look to a speech by ECB President Christine Lagarde for fresh impetus today. If she strikes a similarly hawkish tone to the one struck earlier in the week, the euro might strengthen.
US dollar (USD) plunges as US payrolls disappoint
The US dollar faced heavy selling pressure yesterday after the latest US non-farm payroll report showed the US economy only added 57,000 jobs in June, against the 110,000 forecast.
The data triggered a sharp correction in USD as it saw the odds of the Federal Reserve hiking interest rates before the summer plunge from around 70% to below 50%.
US markets are closed today for the long Independence Day weekend, likely resulting in thin trading conditions that limit movement in the US dollar.
Canadian dollar (CAD) slips amid continued weakness in oil prices
The Canadian dollar (CAD) softened on Thursday, with the appeal of the commodity-linked currency being undermined as Brent crude prices fell back to $70 a barrel.
Looking ahead, if global oil prices continue to retreat, the ‘loonie’ will likely remain on the back foot through to the end of the week.
Data Releases
08:00 NZD Consumer Confidence (Jun)
09:00 AUD Services PMI (Jun)
18:00 EUR Lagarde Speech
01:00 GBP BoE Bailey Speech