Australian Dollar (AUD) Falls amid Risk-Off Trade
The Australian Dollar (AUD) continued struggling through yesterday’s session as a risk-off mood persisted, weighing on the risk-sensitive ‘Aussie’.
Growing anxiety ahead of next week’s US presidential election added to the bearish mood of markets, further limiting the appeal of the risk-sensitive Australian Dollar.
However, an uptick in the third quarter producer price index could offer AUD exchange rates some support this morning, potentially limiting losses amid a downbeat market mood.
Pound (GBP) Slides as Threat of Restrictions Rises
The Pound (GBP) weakened during Thursday’s European session as souring market sentiment and lockdowns in Europe drove Sterling sentiment in the absence of news on Brexit talks progress.
While UK-EU Brexit trade talks continue and a lack of notable UK economic data releases, the Pound struggled amid a risk-off mood as coronavirus cases were reported to be doubling every nine days.
As long as the UK government appears under pressure to introduce tighter restrictions to combat rising Covid-19 cases, the appeal of the Pound may be limited.
Euro (EUR) Slides Thanks to ECB’s Dovish Message
The Euro (EUR) fell yesterday as the European Central Bank (ECB) signalled the likelihood of a December stimulus move.
While the message was largely anticipated, the single currency still came under pressure as ECB President Christine Lagarde expressed concern over the economic outlook. With the central bank expecting to see the currency union deliver ‘very negative’ economic output in November, the mood towards the Euro soured last night.
Even so, an upside surprise from the third quarter Eurozone GDP report may still lift EUR exchange rates ahead of the weekend.
US Dollar (USD) Supported by GDP Rebound
The safe-haven US Dollar (USD) pushed higher against many of the majors overnight amid risk-off trade as the third quarter annualised US GDP bettered forecast.
As the growth rate rebounded 33.1% on the quarter, this helped limit worries over the health of the US economy in the short term. While this improvement was not enough to return the economy to its pre-Covid-19 levels of growth, USD exchange rates continued strengthening on safe-haven demand.
An uptick in September’s personal consumption expenditure price index may fuel further US Dollar gains, given that the measure remains the Federal Reserve’s preferred gauge of inflation.
Canadian Dollar (CAD) Shakes Off Latest Oil Price Slump
The Canadian Dollar (CAD) recovered some of its losses on Thursday as the impact of the dovish Bank of Canada (BOC) announcement faded.
After the selling pressure seen in the wake of the BOC meeting, CAD exchange rates returned to a positive footing, even as average weekly earnings growth showed signs of slowing. A fresh decline in global oil prices also failed to drag on the Canadian Dollar in spite of the latest rise in fears of a fresh oversupply glut.
However, with forecasts pointing towards a slowdown in the monthly GDP in August, the appeal of the Canadian Dollar looks set to weaken tonight.
New Zealand Dollar (NZD) Fails to Benefit from Business Confidence Improvement
The New Zealand Dollar (NZD) failed to push higher on the back of October’s ANZ business confidence index.
While the index showed an improvement on the month, picking up from -28.5 to -15.7, this failed to encourage demand for the ‘Kiwi’ yesterday. With markets in a risk-off mood, NZD exchange rates were left lacking support, especially as the US Dollar returned to a stronger footing and US election jitters grew.
However, an improved consumer confidence index may help to limit the potential for further New Zealand Dollar losses this morning.
Data Releases
08:00 NZD Roy Morgan Consumer Confidence (Oct)
11:30 AUD Private Sector Credit (Sep) 0.1%
11:30 AUD PPI QoQ (Q3) 0.7%
18:00 GBP Nationwide Housing Prices (Oct) 0.4%
21:00 EUR Eurozone Gross Domestic Product (Q3) 9.4%
23:30 CAD Gross Domestic Product (Aug) 0.9%
23:30 USD Personal Consumption Expenditure Price Index (Sep) 1.6%