Australian Dollar Volatile as Apple Sales Forecast Prompts Flash Crash

Australian Dollar Fluctuates as Apple Slashes Sales Forecasts

The Australian Dollar was initially met by a sharp sell-off on Thursday as it got caught up in a mini flash crash. The currency market experienced upheaval after fears of a global slowdown were fuelled by Apple as the tech company slashed its sales forecast, citing a weak economic outlook in China. AUD exchange rates mounted a recovery through yesterday’s European session however as the dust settled and the FX market began to correct itself.

A lack of domestic data will likely result in the Australian Dollar remaining highly sensitive to market risk appetite through the end of the week however, potentially resulting in further AUD volatility.

Pound Buoyed despite Dip in Construction Growth

While the UK’s latest construction PMI showed that activity in the sector slowed again last month, the release failed to prevent the Pound from strengthening on Thursday, with Sterling clawing back some of its recent losses amid speculation it may be oversold and due an upswing in the coming weeks.

These gains may be relinquished later this evening however, with the UK’s Service PMI expected to report that the sector stalled again in December.

Euro Accelerates as USD Weakens

While there was little in the way of domestic data to drive movement in the Euro yesterday, the single currency was still able to edge higher following the flash crash as some profit taking in the US Dollar left an opening for the Euro to appreciate.

The release of the Eurozone’s CPI figures may drag on the Euro later today however, with expectations of a rate hike from the European Central Bank (ECB) potentially being dampened if inflation slides in line with expectations.

US Dollar Gains Dented by Sharp Drop in Manufacturing Growth

After enjoying strong gains in the wake of the flash crash, the US Dollar began to fall back during the European session yesterday amid a bout of profit taking. These losses were then further extended by the release of the latest ISM manufacturing index, which revealed US factory growth slowed sharply at the end of 2018.

This weakness in the US Dollar may also persist through to the end of the week, with economists only expecting a slight pick-up in US payrolls.

Canadian Dollar Strengthens as Oil Approaches Two-Week High

Another upswing in oil prices helped to bolster the Canadian Dollar through Thursday’s session, with crude nearing a two-week high as data revealed exports from Saudi Arabia were slowing and reversing the initial losses seen following the volatility in the currency and stock markets earlier in the day.

However, the Canadian Dollar may be forced to retreat overnight with Canada’s jobs report expected to report a sharp slowdown in employment growth last month.

New Zealand Dollar Mixed Following Flash Crash

Trade in the New Zealand Dollar was mixed on Thursday, with the ‘Kiwi’ also getting caught up in the flash crash that rocked currency markets and weakened demand for risk-sensitive currencies, before recouping its losses.

If market sentiment continues to deteriorate this could drag the New Zealand Dollar lower once again.

Data Released

January 4th 20:00 EUR Eurozone Services PMI (DEC) 51.4
January 4th 20:30 GBP UK Services PMI (DEC) 50.7
January 4th 21:00 EUR Eurozone Inflation Rate (DEC) 1.8%
January 5th 00:30 CAD Unemployment Rate (DEC) 5.7%
January 5th 00:30 USD Non-Farm Payrolls (DEC) 177,000
January 5th 02:15 USD Fed Powell Speech

Louisa Heath