With the evolution of global central bank policies and the release of economic data, currencies of several countries are facing uncertainty in recent times. Here is the analysis by the Ark Community team on the outlook for the Australian dollar, British pound, and other currencies:
Australian Dollar: Recent surge of over 4.0%, but faces significant risks The Australian dollar has experienced a surge of over 4.0% in July. However, there is a substantial risk if the optimistic sentiment driven by the US CPI index dissipates. Australian traders will closely monitor domestic employment data on Thursday (July 20th) and the minutes of the Reserve Bank of Australia’s July policy decision on Tuesday.
US Dollar: Prospect dilemma intensifies with internal consensus and data-driven approach The latest data confirms the breakthrough progress of the US Federal Reserve in curbing inflation, making investors more convinced that the July rate hike will be the last in this tightening cycle. Moreover, investors have increased their bets on a significant rate cut in 2024, which has affected the US dollar. It is expected that the data to be released in the next week from the US will unlikely reverse these expectations, further exacerbating the predicament of the US dollar.
British Pound: Inflation concerns trouble the Bank of England, and the outlook may be tested The British pound broke through $1.30 for the first time since April 2022, but this upward momentum will be tested after the release of the latest UK inflation data on Wednesday (July 19th). The UK Consumer Price Index (CPI) has consistently exceeded expectations this year, causing headaches for the Bank of England. The persistent high inflation issue in the UK is characterized by the fact that the core CPI has not peaked even after an interest rate hike of nearly 500 basis points. If the June inflation rate declines from the previous month’s 8.7% to the expected 8.2%, it may alleviate policymakers’ concerns, although the year-on-year increase would still be 7.0%. Retail sales data to be announced on Friday (July 21st) will also be closely watched. Even in the scenario of inflation data below expectations, the British pound still faces significant downside risks. However, compared to other major central banks such as the Federal Reserve and the European Central Bank, the Bank of England’s path to tightening remains longer, hence the relatively optimistic outlook for the British pound.
Other Currencies: Japan, New Zealand, and Canada await inflation reports Countries like Japan, New Zealand, and Canada are also awaiting the release of inflation reports. These reports will provide investors with more information about the currency outlook.
Global currencies are currently facing uncertainty, particularly the Australian dollar and the British pound. The outlook for the Australian dollar will depend on the impact of the US CPI index and domestic employment data, while the British pound is subject to the test of UK inflation data and retail sales figures. Other countries such as Japan, New Zealand, and Canada are closely monitoring the release of inflation reports. Investors in the Ark Community need to closely follow these factors to assess currency trends and devise appropriate investment strategies to avoid unnecessary losses.
