Australian Dollar fluctuates as Market Risk Appetite Recovers

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  • China Calls for Calm over Tariffs – Investor risk appetite returns
  • Euro Recovers as Trade War Fears Ease – Concerns remain regarding dovish stance of ECB
  • CAD Weaker on Dovish Bank of Canada Bets – NAFTA outlook remains poor
  • US Dollar Rally Slows as Safe Haven Demand Drops – USD supported by ongoing hawkish US Fed


Australian Dollar

The Australian Dollar (AUD) fluctuated yesterday, strengthening as investors responded to news that China’s top central banker pushed for ‘calm’ amid trade tensions between Washington and Beijing, before falling later into the day on a range of hawkish statements from US Fed Chair Jerome Powell.

The Governor of the People’s Bank of China, Yi Gang, asserted that China’s economy remained robust, and that there was no reason for fear.

Meanwhile, Lloyd Blankfein, the boss of Wall Street giant Goldman Sachs predicted that both nations will step back from a devastating trade war.

These words seemed to reassure investors, and a common-sense recovery seemed likely considering the fact that neither side had actually imposed any tariffs yet.

This didn’t last long, however, with US Fed Chair Powell repeating that there is a strong case for interest rate rises.

Sterling

The Pound (GBP) posted a mixed performance yesterday, falling as markets prepared for a House of Commons showdown over how much of a say MPs will have in the Brexit withdrawal process, before eventually recovering later into the day.

This recovery was largely due to Conservative MP Dominic Grieve accepting a government compromise on the issue, putting UK Prime Minister Theresa May on course for victory and ending the threat of a Tory rebellion.

Today, the investor spotlight will shift to the Bank of England’s (BoE) June rate decision, with any sign of the bank anticipating a rate rise in August liable to send Sterling higher.

Euro

The Euro (EUR) continued to struggle yesterday, with European Central Bank (ECB) President Mario Draghi using the central bankers’ gathering in Sintra, Portugal, to confirm the ECB’s stance that the bank will remain patient and cautious when determining monetary policy.

Ultimately, the single currency did see a small – and brief – revival in light of improving risk appetite amongst investors, but this was not lasting.
The next major data release for the Eurozone will be Friday’s PMI readings and consumer confidence report.

US Dollar

The US Dollar (USD) continued its bullish run on Wednesday, capitalising on comments from US Fed Chair Jerome Powell, who repeated that the case for gradual interest rate rises is strong.

Powell did, however, acknowledge that moderate wage growth pointed to some slack in the labour market, but he ultimately concluded that the US economy was performing well and that the outlook for the jobs market was positive.

Looking ahead, today will feature the latest in US jobless claims readings, as well as the US Philadelphia Fed business outlook result for June.

A positive result from either index could extend the ‘Buck’s’ lead.

Canadian Dollar

The Canadian Dollar (CAD) remained rather soft yesterday, with weaker oil prices preventing a full recovery.

On the NAFTA front, Mexican Foreign Minister Luis Videgaray Caso asserted that a meeting with ministers from all three sides will take place in July, and that a deal to conclude NAFTA was still a possibility.

US President Donald Trump also claimed that the US was ‘getting there’ in talks, but that they’d have to wait and see whether a ‘reasonable’ NAFTA deal could be made.

The next main event for the ‘Loonie’ will be Friday’s consumer price inflation results, with a forecast acceleration liable to give CAD a boost.

New Zealand Dollar

The New Zealand Dollar (NZD) stumbled into Thursday, falling as investors reacted to a marked drop in global dairy prices.

The average price of New Zealand’s main commodity fell by 1.2% at the bi-weekly auction, negatively affecting the ‘Kiwi’ Dollar and leaving investors bearish.

Looking ahead, today will feature New Zealand’s GDP results for Q1 this year, but a forecast fall from 2.9% to 2.7% year-on-year could perpetuate NZD’s weakness.


Data Released

21st June 08:45 NZD GDP Growth Q1
21st June 18:30 GBP Public Sector Net Borrowing
21st June 21:00 GBP Bank of England Rate Decision
21st June 22:30 USD Initial Jobless Claims
21st June 22:30 USD Philadelphia Fed Business Outlook

  • China Calls for Calm over Tariffs – Investor risk appetite returns
  • Euro Recovers as Trade War Fears Ease – Concerns remain regarding dovish stance of ECB
  • CAD Weaker on Dovish Bank of Canada Bets – NAFTA outlook remains poor
  • US Dollar Rally Slows as Safe Haven Demand Drops – USD supported by ongoing hawkish US Fed


Australian Dollar

The Australian Dollar (AUD) fluctuated yesterday, strengthening as investors responded to news that China’s top central banker pushed for ‘calm’ amid trade tensions between Washington and Beijing, before falling later into the day on a range of hawkish statements from US Fed Chair Jerome Powell.

The Governor of the People’s Bank of China, Yi Gang, asserted that China’s economy remained robust, and that there was no reason for fear.

Meanwhile, Lloyd Blankfein, the boss of Wall Street giant Goldman Sachs predicted that both nations will step back from a devastating trade war.

These words seemed to reassure investors, and a common-sense recovery seemed likely considering the fact that neither side had actually imposed any tariffs yet.

This didn’t last long, however, with US Fed Chair Powell repeating that there is a strong case for interest rate rises.

Sterling

The Pound (GBP) posted a mixed performance yesterday, falling as markets prepared for a House of Commons showdown over how much of a say MPs will have in the Brexit withdrawal process, before eventually recovering later into the day.

This recovery was largely due to Conservative MP Dominic Grieve accepting a government compromise on the issue, putting UK Prime Minister Theresa May on course for victory and ending the threat of a Tory rebellion.

Today, the investor spotlight will shift to the Bank of England’s (BoE) June rate decision, with any sign of the bank anticipating a rate rise in August liable to send Sterling higher.

Euro

The Euro (EUR) continued to struggle yesterday, with European Central Bank (ECB) President Mario Draghi using the central bankers’ gathering in Sintra, Portugal, to confirm the ECB’s stance that the bank will remain patient and cautious when determining monetary policy.

Ultimately, the single currency did see a small – and brief – revival in light of improving risk appetite amongst investors, but this was not lasting.
The next major data release for the Eurozone will be Friday’s PMI readings and consumer confidence report.

US Dollar

The US Dollar (USD) continued its bullish run on Wednesday, capitalising on comments from US Fed Chair Jerome Powell, who repeated that the case for gradual interest rate rises is strong.

Powell did, however, acknowledge that moderate wage growth pointed to some slack in the labour market, but he ultimately concluded that the US economy was performing well and that the outlook for the jobs market was positive.

Looking ahead, today will feature the latest in US jobless claims readings, as well as the US Philadelphia Fed business outlook result for June.

A positive result from either index could extend the ‘Buck’s’ lead.

Canadian Dollar

The Canadian Dollar (CAD) remained rather soft yesterday, with weaker oil prices preventing a full recovery.

On the NAFTA front, Mexican Foreign Minister Luis Videgaray Caso asserted that a meeting with ministers from all three sides will take place in July, and that a deal to conclude NAFTA was still a possibility.

US President Donald Trump also claimed that the US was ‘getting there’ in talks, but that they’d have to wait and see whether a ‘reasonable’ NAFTA deal could be made.

The next main event for the ‘Loonie’ will be Friday’s consumer price inflation results, with a forecast acceleration liable to give CAD a boost.

New Zealand Dollar

The New Zealand Dollar (NZD) stumbled into Thursday, falling as investors reacted to a marked drop in global dairy prices.

The average price of New Zealand’s main commodity fell by 1.2% at the bi-weekly auction, negatively affecting the ‘Kiwi’ Dollar and leaving investors bearish.

Looking ahead, today will feature New Zealand’s GDP results for Q1 this year, but a forecast fall from 2.9% to 2.7% year-on-year could perpetuate NZD’s weakness.


Data Released

21st June 08:45 NZD GDP Growth Q1
21st June 18:30 GBP Public Sector Net Borrowing
21st June 21:00 GBP Bank of England Rate Decision
21st June 22:30 USD Initial Jobless Claims
21st June 22:30 USD Philadelphia Fed Business Outlook

Post by TorFX

 

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