The Australian dollar rallied on upbeat GDP data while the greenback steadied after sharp declines this week. Upcoming key risk events tomorrow dampened risk appetite in the markets as investors were cautious ahead of the UK elections, the European Central Bank meeting, and the testimony to a Senate committee by former FBI Director James Comey. This helped support gold near seven-month highs.
The aussie was one of the best performing major currencies against the US dollar in the Asian session as it rose to a one-month high of $0.7543 from $0.7500. Markets were expecting a weaker GDP number but data showed the Australian economy grew 0.3% over the first quarter versus 0.2% anticipated and 1.7% in the year to March compared to a 1.5% rise that was forecast.
Sterling remained resilient ahead of the UK general election tomorrow and traded in a tight range against the dollar, close to the key $1.2900 level.
The euro has been moving sideways all week just below $1.1285. Focus is shifting to the ECB policy meeting tomorrow and expectations are for the central bank to have a more hawkish tone with regards to the Eurozone economy and may even hint that it is exiting from its quantitative easing program soon.
The dollar stabilized against the yen after a big sell-off yesterday and hovered near six-week lows of 109.20 yen. The greenback is being weighed by uncertainty around Thursday’s testimony at a Senate Intelligence Committee hearing by James Comey, the former FBI Director who was fired by President Donald Trump. He is expected to testify whether Trump asked him to drop the FBI investigation into former national security adviser Michael Flynn.
Gold gained 1% yesterday to reach its highest level since early November at $1295.97 an ounce. Prices steadied in Asian trading today but the safe haven asset remains supported due to risk aversion and a broadly weaker dollar.
WTI oil prices rebounded to test the $48 a barrel level but gains were capped as the commodity is being put under pressure by tensions in the Middle East amongst oil producers due to a diplomatic rift with Qatar.
