Australian Dollar (AUD) Strengthens on Renewed Optimism
The Australian Dollar (AUD) strengthened across the board on Thursday. News that international travel will soon be possible for vaccinated Australians with a visible digital seal (VDS) renewed economic optimism as lockdown easing approaches.
Building permit approvals for August also supported the optimistic mood, with unexpected 6.8% growth instead of -5% contraction forecast.
Meanwhile, manufacturing PMI data released this morning may support AUD further as figures are expected to confirm growth in the sector reached a three-month high in September.
Pound (GBP) Halts Recent Run of Losses on UK GDP
The Pound (GBP) stopped its recent run of losses during yesterday’s European session after UK second quarter GDP growth was upwardly revised to 5.5% from 4.8%, showing a better-than-expected rebound in the UK economy as it reopened.
However, the Pound remains vulnerable after Bank of England (BoE) Governor Andrew Bailey warned the recovery to pre-pandemic levels will take longer than first thought due to supply chain problems derailing growth.
Looking ahead, UK manufacturing PMI data could cause GBP headwinds this evening as data is expected to show the slowest expansion in factory activity since February.
Euro (EUR) Drops as German Inflation Rises
Euro (EUR) exchange rates weakened in the European session as German inflation rose to 4.1% in September, highlighting price pressure concerns in the Eurozone’s largest economy and the possible impact on the bloc’s economic recovery.
Europe’s growing energy crisis also weighed on the single currency as natural gas prices hit another record high, increasing costs for consumers and businesses across Europe.
More Eurozone data will likely drive EUR movement this afternoon. PMI figures are expected to show the manufacturing sector suffered its slowest expansion in 7 months and inflation is forecast to have increased 0.3% in September to 3.3%.
US Dollar (USD) Rally Slows amid Increased Risk Appetite
The US Dollar’s (USD) impressive run of gains came to an end on Thursday as a more cautiously optimistic market mood limited demand for the safe-haven ‘Greenback’.
US second quarter GDP figures released last night helped support a more optimistic mood after revised data showed 6.7% growth, better than the 6.6% previously estimated.
Data released tonight could drive additional movement in USD, with the ISM manufacturing PMI forecast to show robust growth in the factory sector in September.
Canadian Dollar (CAD) Mixed as Oil Prices Dip
The commodity-linked Canadian Dollar (CAD) struggled as WTI crude prices dropped below $75 a barrel during yesterday’s session.
Data released later tonight could drag on CAD exchange rates, with GDP for July expected to show -0.2% contraction and manufacturing PMI growth expected to have slowed in September.
New Zealand Dollar (NZD) Makes Limited Gains
The New Zealand Dollar (NZD) clawed back some recent losses against USD and EUR yesterday but struggled against its more risk-sensitive peers.
With the Reserve Bank of New Zealand (RBNZ) expected to raise interest rates next week, NZD may receive modest support ahead of the central bank’s decision.
However, ongoing lockdown measures and the country’s battle with the Delta variant of coronavirus could limit the ‘Kiwi’.
Data Releases
1st Oct 09:00 AUD Manufacturing PMI (Sep) 57.3
1st Oct 16:00 EUR DE Retail Sales (Aug) 1.5%
1st Oct 18:00 EUR Manufacturing PMI (Sep) 58.7
1st Oct 18:30 GBP Manufacturing PMI (Sep) 56.3
1st Oct 19:00 EUR Inflation Rate (Sep) 3.3%
1st Oct 22:30 CAD GDP (Jul) -0.2%
1st Oct 22:30 USD PCE Price Index (Aug) 4.2%
1st Oct 23:30 CAD Manufacturing PMI (Sep) 56.5
2nd Oct 12:00 USD ISM Manufacturing PMI (Sep) 59.6