Australian Dollar (AUD) Soars following Shock RBA Rate Rise
The central bank shocked markets with a 25bps interest rate rise, while also signalling that ‘some further tightening of monetary policy may be required.’
Pound (GBP) Rises despite Lack of Data
The Pound (GBP) strengthened on Friday, despite a lack of market-moving economic data.
Sterling’s upside came amid an upbeat market mood and ongoing bets on another Bank of England (BoE) interest rate rise.
GBP trading conditions are thin today, with no UK data due to be published. As a result, we may see Sterling struggle for a clear direction.
Euro (EUR) Drops following Weaker GDP
The Euro (EUR) came under pressure at the end of last week’s trade after the Eurozone’s latest GDP data missed forecasts, showing a meagre 0.1% recovery in the first quarter of this year.
Later in the session, the Euro found its downside cushioned thanks to the currency’s negative correlation with a weakening US Dollar (USD).
The latest Eurozone consumer price index is in focus today. If headline and core inflation remained elevated last month, as forecasters expect, the single currency could soar.
US Dollar (USD) Slides as Inflation Data Disappoints
The US Dollar tumbled on Friday as USD bulls were disappointed by the latest US inflation data.
Although the core PCE price index suggested stickier inflationary pressures, the headline rate declined more than expected. This seemed to disappoint some currency traders who were hoping for a hotter reading, which led to selling pressure around the ‘Greenback’.
Turning to today, another expected decline in US job openings could dent USD today. Signs of more slack in the American labour market may dampen Federal Reserve rate hike bets.
Canadian Dollar (CAD) Ticks Higher as Oil Rises
The Canadian Dollar (CAD) found some success on Friday as an uptick in oil prices lifted the commodity-linked ‘Loonie’. However, weaker-than-forecast Canadian GDP capped CAD’s upside.
Amid a lack of Canadian data today, oil price dynamics could drive most movement in the currency.
New Zealand Dollar (NZD) Firms Thanks to AUD Correlation
The New Zealand Dollar (NZD) also strengthened last night, as the ‘Kiwi’ was pulled higher by its positive correlation to the ‘Aussie’.