Australian Dollar’s Rise Tempered by RBA’s Warning of ‘Substantial’ Business Failures

Australian Dollar (AUD) Struggles as RBA Warns of Business Failures

The Australian Dollar (AUD) struggled through Friday’s Asian session, with the currency struggling to find support after the Reserve Bank of Australia’s (RBA) Financial Stability Review warned that business failures look set to rise ‘substantially’.

However, the ‘Aussie’ was able to claw back some ground through the European session amidst an improvement in risk sentiment.

Turning to this week’s session, the focus for AUD investors looks to be on Australia’s latest jobs report. Will a rise in unemployment in September put some pressure on the Australian Dollar?

Pound (GBP) Dented by Poor GDP Figures

The Pound (GBP) closed out last week’s session on a low after the UK’s latest GDP figures printed below expectations.

While Friday’s release showed the UK economy returned to growth in the three months to August, it also reported that growth only expanded by 2% month-on-month, stoking concerns over the trajectory of the UK’s economic recovery.

Looking ahead, it looks to be a choppy week of trade for the Pound as the looming Brexit deadline sees the UK and EU in a race against time to at least get the outlines of a trade deal ironed out.

Euro (EUR) Strengthens Despite Coronavirus Concerns

The Euro (EUR) ticked higher on Friday, finding support from the improving market sentiment which undermined the US Dollar (USD), the single currency’s main rival.

This uptick in EUR exchange rates came in spite of growing concern over Europe’s coronavirus resurgence as several cities reported record spikes in cases, and more restrictions were implemented across the continent.

Coming up this week, the focus for EUR investors will be on the latest ZEW surveys. Will the Euro be supported by another improvement in German economic sentiment in Germany this month?

US Dollar (USD) Slips on US Stimulus Hopes

The US Dollar (USD) experienced a broad selling bias at the end of last week’s session as a risk-on mood undermined the appeal of the safe-haven ‘Greenback’.

The improved mood came on the back of revived hopes for a comprehensive US stimulus package as reports suggested that talks between Democrats and Republicans are ongoing, in spite of a tweet from President Trump earlier in the week calling for a halt to negotiations.

Looking ahead, it’s likely we could be in for more USD volatility over the coming week as US political uncertainty starts to exert greater pressure on the US Dollar the closer we get to November’s election.

Canadian Dollar (CAD) Bolstered by Upbeat Data

The Canadian Dollar (CAD) struck higher on Friday, with the appeal of the ‘Loonie’ being bolstered by a larger-than-expected fall in Canada’s unemployment rate in September as the jobless rate hit its lowest level since March.

New Zealand Dollar (NZD) Buoyed by Upbeat Chinese PMIs

The New Zealand Dollar (NZD) trended higher at the end of last week as risk-on trade and a stronger-than-expected Chinese services PMI bolstered the appeal of the ‘Kiwi’.

Meanwhile, the ‘Kiwi’ could face some volatility over the coming week, ahead of New Zealand’s general election next weekend.

Louisa Heath