US Dollar (USD) Soars as Strong Data Revives Rate Hike Bets
After weakening in the wake of the Federal Reserve’s interest rate decision, the US Dollar (USD) then surged higher yesterday following hotter-than-forecast economic data.
US GDP unexpectedly expanded in the second quarter, reigniting expectations of more tightening from the Fed. Adding to this, durable goods orders and initial jobless claims also beat forecasts.
More high-impact data today could drive fresh volatility. The Fed’s preferred measure of inflation – the core PCE price index – is set to show another decline. Could USD shed yesterday’s gains in response?
Euro (EUR) Tumbles as ECB Sounds Dovish
The Euro (EUR) plunged yesterday afternoon after the European Central Bank (ECB) delivered what many speculate could be the final interest rate hike of its current tightening cycle.
ECB President Christine Lagarde said that the bank could hike or pause at its next meeting, depending on the data. Considering declining inflation and weaker economic growth, many think that the ECB will not raise rates higher.
German data today could give an indication of whether more hikes may be in store. A second-quarter recovery in the Eurozone’s largest economy may boost EUR, while cooling German inflation could see the Euro fall again.
Pound (GBP) Fluctuates amid Market Volatility
The Pound (GBP) traded in a wide range yesterday, as the volatility of the US GDP print and the ECB decision rippled through markets.
A weaker-than-forecast distributive trades survey from the Confederation of British Industry (CBI) put some pressure on the Pound, as it unexpectedly slumped from -9 to -25.
Turning to today, a lack of UK economic data could see Sterling end the week with mixed movement.
Canadian Dollar (CAD) Strengthens as Oil Hits $80 per Barrel
The oil-linked Canadian Dollar (CAD) climbed yesterday as WTI crude rose above $80 a barrel for the first time since April.
Coming up, the latest Canadian GDP data is due out. With growth expected for both May and June, CAD could potentially enjoy support.
Australian Dollar (AUD) Slides as Data Misses Forecasts
The Australian Dollar (AUD) tumbled last night. An unexpected slump in retail sales and a sharp cooldown in producer price inflation weighed heavily on the ‘Aussie’.
New Zealand Dollar (NZD) Slumps as Consumer Confidence Fades
The New Zealand Dollar (NZD) also fell sharply in overnight trade, as an unexpected drop in consumer confidence and worries about more Federal Reserve rate hikes pushed the ‘Kiwi’ lower.