AUD Exchange Rates Lifted by US-China Trade Optimism

Australian Dollar Rallies on US-China Trade Hopes

The Australian Dollar (AUD) rallied on Friday, rising on the back of fresh risk appetite amidst hopes for progress in US-China trade talks. Speaking to Fox, White House economic adviser Larry Kudlow suggested there has been a ‘softening in the psychology’ of talks and he was hopeful that Beijing will be more receptive to attempts to open the Chinese economy.

This week’s trade talks are likely to dictate the direction of the Australian Dollar this week, with the ‘Aussie’ expected to extend its gains if developments appear positive.

Pound Sinks as EU Unimpressed by Johnson’s Brexit Offer

The Pound (GBP) ticked lower at the end of last week’s session after the European Parliament president, David-Maria Sassoli formally rejected Boris Johnson’s Brexit proposal. At the same time Sterling failed to find support from reports suggesting that Johnson will obey a law compelling him to seek another Brexit extension from the EU. The PM had previously claimed he would rather ‘die in a ditch’ than ask for another delay.

Looking ahead, we expect Brexit headlines to continue dominating GBP exchange rates in the coming week and injecting even more volatility into the Pound.

Euro Subdued on US-EU Trade Concerns

The Euro (EUR) was left muted on Friday as markets express concern for how a burgeoning trade dispute between the US and EU could impact the Eurozone’s already fragile economy. This followed comments from German Foreign Minister Heiko Maas who said the EU will respond to $7.5bn worth of tariffs threatened by the US.

Meanwhile the Euro may face some headwinds at the start of this week’s session if data released later this afternoon reveals German factory orders contracted again in August.

US Dollar Gains as US Unemployment Strikes 50-Year Low

The US Dollar (USD) regained some traction at the end of last week’s session after the latest US job’s data reported the domestic unemployment rate fell to just 3.5%, its lowest levels in 50 years. However, the ‘Greenback’ was only able to make modest gains as accompanying data showed a weaker than expect rise in payrolls and stagnation in wage growth.

A speech by Federal Reserve Chair Jerome Powell will be in the spotlight today, with USD investors watching closely for any signs that the recent run of gloomy US data could push the Fed to cut rates again this month.

Canadian Dollar Jumps as Oil Prices Climb

The Canadian Dollar (CAD) accelerated on Friday, with the ‘Loonie’ bolstered by an uptick in oil prices and data revealing Canada’s trade deficit narrowed more than expected in August.

New Zealand Dollar Lifted by Improved Risk Appetite

The New Zealand Dollar (NZD) was also buoyed by the prospect of positive progress in US-China trade talks on Friday, with NZD investors hoping an easing of trade tensions may help lift some of the pressure on the Reserve Bank of New Zealand (RBNZ) to continue lowering rates.

Data Releases

October 1st 08:30 AUD AIG Manufacturing Index (Sep) 52

Louisa Heath