Australian Dollar (AUD) Strengthens on Bullish Trading
The Australian Dollar (AUD) rose against the majority of its peers yesterday as a risk-on market mood supported the currency alongside impressive PMI data.
AU manufacturing reached a three-month high of 57.3, while service providers increased their workforce levels amidst market optimism, boosting the services PMI from 42.9 last month to 44.9 in September.
A lack of data in today’s session means the ‘Aussie’ is likely to trade on overall risk sentiment, potentially supported by any tailwinds from its largest trading partner, China.
Pound (GBP) Bolstered by Rate Hike Speculation
The Pound is trending up in the aftermath of the Bank of England (BoE)’s interest rate decision, as the central bank acknowledges that the case for modest tightening strengthened from August.
This prompted investors to revise their expectations for the next BoE rate hike, with Sterling surging as investors price in a potential March 2022 hike.
Looking ahead, the Pound could relinquish some of these gains later today as the Confederation of British Industry’s (CBI) distributive trade index is expected to report a slowing of UK retail sales volumes.
Euro (EUR) Faces Headwinds as PMI Data Disappoints
The Euro (EUR) traded in a mixed range against its peers on Thursday as September PMI data from both Germany and the Eurozone printed below expectations.
Manufacturing in Germany fell to 58.5 amidst supply disruption; Eurozone manufacturing likewise fell to 58.7. Services data printed at 56 for Germany and 56.3 in the Eurozone, both reductions on last month’s figures.
EUR movement today is likely to be driven by Germany’s Ifo business climate index- initial forecasts predict a slight drop in September.
US Dollar (USD) Sinks as Risk-On Mood Weakens Safe-Haven Demand
A slump in safe-haven demand saw the US Dollar (USD) fall yesterday as the outlook improved for China’s economy: the People’s Bank of China (PBOC) pumped $17bn into the system as failing real-estate company Evergrande promised to pay off some of their debt.
Relinquishing previous gains on Fed comments, the ‘Greenback’ extended its losses as PMI data for the month of September printed below expectations. Manufacturing missed its 61.5 estimate by 1 point, while services data printed at 54.4 as opposed to the 55 expected.
Speeches from Fed officials may influence USD trading direction later this evening. If speakers strike a hawkish tone, the US Dollar could find renewed support.
Canadian Dollar (CAD) Firms as Oil Prices Lift
The Canadian Dollar (CAD) rallied on Thursday, with a bump in oil prices and stronger-than-expected domestic retail sales figures both reflecting positively on the ‘Loonie’.
New Zealand Dollar (NZD) Strengthens Despite RBNZ Uncertainty
The New Zealand Dollar (NZD) sank against its peers initially in yesterday’s session, as temporary USD upside suppressed NZD demand and uncertainty over the Reserve Bank of New Zealand (RBNZ)’s rate projections weighed upon the ‘Kiwi’. Analysts questioned whether the central bank’s first rate hike would be 25bp rather than 50bp.
Later in the session, however, the New Zealand Dollar found support as risk sentiment revived and the currency’s close trading partner, AUD, likewise climbed against its peers. Today’s balance of trade release will likely provide further trading impetus for the ‘Kiwi’.
Data Releases
Sep 24th 08:45 NZD Balance of Trade (Aug) N$-633m
Sep 24th 18:00 EUR German Ifo Business Climate (Sep) 98.9
Sep 24th 20:00 GBP CBI Distributive Trades (Sep) 35
Sep 24th 23:00 GBP BoE Tenreyo Speech
Sep 25th 00:00 USD Fed Powell Speech