Australian dollar (AUD) buoyed by robust PMI data
The Australian dollar (AUD) closed last week’s session on positive footing, with the release of stronger-than-expected domestic PMIs.
As private sector activity climbed to a five-month high in July, it reinforced bets for further monetary tightening from the Reserve Bank of Australia (RBA).
Turning to the start of this week, with Australian data in short supply, the ‘Aussie’ may struggle to consolidate its recent gains amid increasing geopolitical uncertainty.
New Zealand dollar (NZD) supported by RBNZ rate bets
The New Zealand dollar (NZD) also firmed on Friday, with the ‘kiwi’ drawing support from an ongoing hawkish repricing of Reserve Bank of New Zealand (RBNZ) policy expectations.
Much like its antipodean cousin, the New Zealand dollar may face headwinds today if heightened geopolitical tensions suppress risk appetite.
Pound (GBP) underpinned by upbeat data
The pound (GBP) stabilised at the end of last week as GBP investors welcomed a burst of robust UK economic indicators.
The UK’s latest retail sales and services PMI both surprised to the upside, helping to lift some of the malaise that has hung over the UK economy in recent months.
The Confederation of British Industry (CBI) will publish its latest distributive trades index later today, which could crystallise Sterling support if it also points to an uptick in UK retail activity this month.
Euro (EUR) slips despite robust PMIs
The euro (EUR) trended broadly lower at the end of last week, despite the Eurozone’s preliminary PMIs for July beating consensus forecasts.
The pullback appeared linked to European energy concerns, amid growing concern of potential gas shortages in the winter.
Today sees the release of Germany’s latest IFO business climate index, which could extend additional support to the euro if sentiment continued to improve this month.
US dollar (USD) knocked by fresh Trump tariffs
The US dollar (USD) initially drifted lower on Friday, being dented by fresh US trade uncertainty as President Donald Trump imposed new tariffs on 60 US trading partners.
However, the ‘greenback’ was able to stabilise by the end of the session after the latest US S&P PMIs outpaced expectations in July.
Looking ahead, the US dollar looks poised to mount a more convincing recovery as markets reopen this week, as tensions in the Middle East continue to escalate.
Canadian dollar (CAD) dented by softer oil prices
The Canadian dollar (CAD) ticked lower on Friday, pressured by both a softening of oil prices as well as a much weaker-than-forecast domestic PPI reading.
Expect movement in CAD to remain tied to oil price dynamics at the start of this week, with the potential for the ‘loonie’ to quickly rebound if ongoing tensions in the Middle East start to stoke prices again.
Data Releases
18:00 EUR German IFO Business Climate (Jul)
20:00 GBP CBI Distributive Trades (Jul)
22:30 USD Durable Goods Orders (Jun)