Australian Dollar Buoyed despite abysmal consumer confidence index

Australian Dollar (AUD) Gains in Upbeat Trade

The Australian Dollar (AUD) struck higher on Wednesday, with the appeal of the risk-sensitive currency strengthening amidst a risk-on tone. This was driven by both coronavirus vaccine optimism as well a drop in the US Dollar (USD).

However the Australian Dollar may struggle to extend these gains through today’s session if Australia’s latest jobs figures report a notable increase in unemployment in August.

Pound (GBP) Rallies on Easing Brexit Uncertainty

The Pound (GBP) extended its recovery into its third consecutive trading session on Wednesday, with Brexit concerns continuing to fade on hopes that opposition to the controversial Internal Markets bill could see it amended in such a way as not to break international law.

This helped to offset domestic economic concerns after the UK’s consumer price index revealed inflation slumped to just 0.2% in August, its lowest levels since 2015.

Top of the agenda going into today’s session will be the Bank of England’s (BoE) latest rate decision. GBP investors aren’t pricing in any policy changes this month, but will be on the lookout for any hints that the BoE is still exploring the possibility of negative interest rates.

Euro (EUR) Rangebound as Currency Struggles for Direction

The Euro (EUR) was mostly rangebound through yesterday’s trading session, as the absence of any notable EUR data and cautions ahead of the Federal Reserve rate decision left the single currency without any clear directional bias.

The Euro’s struggle for momentum was not helped by ongoing concerns over Europe’s coronavirus resurgence, which continues to dent hopes for a sharp sustained recovery in the Eurozone.

Coming up, the Euro could continue to struggle to find support today, as the Eurozone’s final CPI reading for August looks set to confirm the bloc suffered its first month of deflation since 2016.

US Dollar (USD) Muted ahead of Fed Rate Decision

The US Dollar (USD) weakened through yesterday’s Europe session, undermined by risk-on trade and a weaker-than-expected US retail sales print in August.

Investors also steered clear of the US Dollar ahead of the Federal Reserve’s latest policy decision amidst speculation the bank could strike a more dovish tone following changes to its average inflation targets last month.

Turning to today’s session, the publication of last week’s US initial jobless claims could keep the pressure on the US Dollar, if claims remained elevated in the week ending to 12 September.

Canadian Dollar (CAD) Stumbles on Lacklustre Inflation

The Canadian Dollar (CAD) was placed on the defensive on Wednesday, retreating on the back of Canada’s weaker-than-expected consumer price index, which revealed inflation stalled at 0.1% in August, against forecasts it would accelerate to 0.4%.

New Zealand Dollar (NZD) Rallies in Upbeat Trade

The New Zealand Dollar (NZD) maintained an upward trajectory through yesterday’s session, being buoyed by both risk-on trade as well as lower domestic unemployment forecasts.

This upside in the ‘Kiwi’ may be extended through today’s session should we see New Zealand’s second quarter GDP figures print above expectations.

Data Releases

04:00 USD Fed Interest Rate Decision
11:30 AUD Unemployment Rate (Aug) 7.7%
19:00 EUR Inflation Rate MoM Final (Aug) -0.4%
21:00 GBP BoE Interest Rate Decision 0.1%
22.30 USD Initial Jobless Claims (12/Sep) 850K

Louisa Heath