Australian dollar (AUD) rangebound in cautious trade
The Australian dollar (AUD) was muted through the start of this week as fresh trade uncertainty and the potential escalation of tensions in the Middle East weighed on market risk appetite.
AUD demand was also limited by forecasts that Australia’s upcoming consumer price index may report inflation cooled at an accelerated pace in July.
Today sees the release of the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting. A hawkish tilt to the minutes could win the ‘Aussie’ some support later this morning.
New Zealand dollar (NZD) subdued amid shock contraction in retail sales
The New Zealand dollar (NZD) trended lower through Monday’s session, undermined by risk-off flows and an unexpected contraction in domestic retail sales in the second quarter.
Looking ahead, the ‘kiwi’ is vulnerable to further losses if market sentiment remains cautious today.
Pound (GBP) buoyed by improving productivity outlook
The pound (GBP) was able to attract modest support yesterday amid reports that UK productivity may not be as weak as official figures suggest.
Analysis from the Resolution Foundation thinktank suggests the UK pulled itself out of its productivity slump in recent years, which could help provide a firmer foundation for growth going forward.
UK data remains in limited supply today, likely leaving movement in the pound to be dictated by wider currency trends.
Euro (EUR) struggles in absence of data
The euro (EUR) was subdued on Monday as a lull in Eurozone data left the single currency struggling to attract support.
EUR sentiment was further undermined by the euro’s strong negative correlation with the US dollar (USD) as the latter crept higher.
Coming up, the euro could receive a boost later today, if Germany’s latest IFO survey reports that business sentiment continued to improve this month.
US dollar (USD) firms amid Iran sanction uncertainty
The US dollar ticked higher through the start of this week’s session, allowing the ‘greenback’ to claw back a small portion of the previous week’s losses.
Investors favoured the safe-haven currency as US Treasury Secretary Scott Bessent outlined new US economic sanctions on Iran.
Markets will be keeping a close eye on Beijing’s response to the sanctions, as any threat to its energy imports from Iran could threaten US trade ties with China.
Canadian dollar (CAD) tumbles as US slaps tariffs on Canada
The Canadian dollar (CAD) faced heavy selling pressure through Monday’s session as Ottawa vowed to respond in kind to new US tariffs on Canadian goods.
Expect the ‘loonie’ to remain in the doldrums today amid concerns about the potential economic fallout from a US-Canada trade war.
Data releases
11:30 AUD RBA Minutes
16:00 EUR German GDP (Q2)
18:00 EUR German IFO Business Climate (Aug)
22:15 USD ADP Employment Change (8/Aug)