As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Will an increase in the NY Empire State Manufacturing Index buoy the US dollar?
- New Zealand Dollar expected to rise following higher-than-forecast inflation
- Dovish RBA meeting minutes to weigh on the ‘Aussie’
Rebounding NY Empire State Manufacturing Index to buoy US Dollar
At the end of last week the US dollar remained under pressure as stronger-than-expected US inflation data did little to curb expectations that the Federal Reserve will slash interest rates later this month.
Fed Chair Jerome Powell kept the focus on global risks that may trigger the bank to cut interest rates as he testified before Congress on Thursday.
On Friday, the US Producer Price Index edged up by more than expected, but the result was still the smallest annual increase in producer inflation in nearly two-and-a-half years.
Meanwhile, the US dollar could edge up this afternoon following the release of the US NY Empire State Manufacturing Index.
If the index rebounds in July following June’s slump, it could buoy the ‘Greenback’.
‘Kiwi’ expected to gain following better-than-expected inflation
At the end of last week’s session, the New Zealand Business PMI came in below forecast.
While the PMI edged up in June, the sub-index for employment slumped to 48, the lowest level since August 2016.
However, the New Zealand Dollar could find some support this evening following the release of the New Zealand Consumer Price Index (CPI). If inflation rises by more than forecast it could buoy the ‘Kiwi’.
Dovish RBA minutes and fears of a third rate cut could weigh on the ‘Aussie’
On Friday, the Australian Dollar edged up against a handful of currencies as White House Trade Advisor Peter Navarro said media reports on the US-China trade talks were not reliable and ‘garbage’.
Discussing trade talks, Navarro said the talks were ‘in a quiet period’ and stated that US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would travel to Beijing in the near future.
The Australian Dollar also benefited from the publication of encouraging Chinese industrial production and retail sales figures.
However, AUD exchange rates could be pressured lower by the Reserve Bank of Australia’s (RBA) meeting minutes. If the minutes hint at the prospect of a third interest rate cut this year, the ‘Aussie’ could slump.
Monday 15th July
13:30 USD NY Empire State Manufacturing Index
23:45 NZD Consumer Price Index (Q2)
Tuesday 16th July
02:30 AUD RBA Meeting Minutes
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)