Australian Dollar (AUD) Boosted as Victoria Covid-19 Cases Expected to Fall to Double-Digits
The Australian Dollar (AUD) made gains at the end of last week as sentiment was supported after Victoria state said it soon expects coronavirus cases to be in the double-digits as the strict lockdown enters its sixth week.
Victoria reported 113 new cases, which was unchanged from a day earlier and far below its one-day record of 725 cases reported at the start of the month. However, New South Wales reported 13 new cases, the largest one-day rise since mid-August.
Looking ahead, the ‘Aussie’ could struggle during today’s session if the latest business inventories and company gross profits data both disappoint investors.
Pound (GBP) Surges to Eight-Month High Ahead of BoE Speech
The Pound (GBP) jumped above $1.33 for the first time this year, reaching an eight-month high against the US Dollar on Friday, and remained steady against the Euro.
Meanwhile, Sterling was unmoved following the highly anticipated speech at Jackson Hole from the Bank of England’s (BoE) Governor, Andrew Bailey. The bank’s chief did note that the central bank has more ammunition to help support Britain, and that there are times when ‘we need to go big or go fast’.
Meanwhile, Pound exchange rates are likely to be subdued today due to the Bank Holiday in Britain, which is likely to leave GBP largely flat.
Euro (EUR) Slides as Economic Sentiment Far Below Pre-Covid Levels
The Euro (EUR) suffered losses on Friday as despite the bloc’s economic sentiment rising once again in August for the fourth month in a row, it remains well below pre-coronavirus levels.
Meanwhile, after the previous day’s key speech from Federal Reserve Chair, Jerome Powell, attention turned to the bloc’s inflation rate. France’s inflation came in as expected, and traders looked ahead to this week’s German and Eurozone inflation readings.
Added to this, EUR could suffer losses if the latest Italian GDP data reveals Italy has suffered a deeper slump than expected in the second quarter as the economy contracts for the third quarter in a row.
US Dollar (USD) Slides despite Increase in Consumer Spending
The US Dollar (USD) suffered considerable losses during Friday’s session despite data showing US consumers increased spending by 1.9% last month, marking a third consecutive month of increases in consumer spending.
However, the modest increase in spending did represent a slowdown compared to the previous two months. Added to this, momentum is likely to fade as the coronavirus crisis lingers and the US government’s stimulus package remains at an impasse.
Due to a lack of significant economic data releases it is likely the Dollar could continue to suffer losses as markets continue to react to the Federal Reserve’s change in policy.
Canadian Dollar (CAD) Tumbles on Record GDP Slump
The Canadian Dollar (CAD) slumped at the end of last week after the latest GDP data revealed that Canada suffered a record economic contraction.
GDP slumped by a record -11.5% in the second quarter, and at an annualised rate of -38.7% which weighed on the ‘Loonie’.
Looking ahead, the Canadian Dollar could edge higher than forecast if the latest data reveals building permits rose once again in July.
New Zealand Dollar (NZD) Buoyed by Fed’s New Policy
The New Zealand Dollar (NZD) made gains at the end of the week as the US Federal Reserve’s new policy relieved pressure on the Reserve Bank of New Zealand (RBNZ).
The RBNZ’s Assistant Governor, Christian Hawkesby, said that the bank’s policy approach was in line with the Fed’s average inflation targeting strategy.
Looking ahead, the ‘Kiwi’ could struggle to make gains today following the release of the latest ANZ business confidence if data reveals sentiment has slumped further in August.
Upcoming Data
11:00 NZD ANZ Business Confidence (Aug) -33
18:00 EUR Italy Final GDP (Q2) -12.4%
22:30 CAD Building Permits (Jul) 4%