Australian Dollar (AUD) Strengthens as Commodity Prices Rise
The Australian Dollar (AUD) gained against the majority of its peers yesterday as commodity prices rose and a risk-on market mood supported AUD sentiment.
Coal, oil, gas and metals all increased in value, with copper surging towards an all-time high: renewed demand for Australian exports supplied upside pressure alongside plateauing Covid cases.
Looking ahead, a lack of significant data today means trading will likely be driven by risk sentiment and any further comments from the Reserve Bank of Australia (RBA).
Pound (GBP) Climbs on BoE Optimism
The Pound (GBP) was supported on Tuesday by ongoing rate hike speculation, in addition to a risk-on market mood and expectations of foreign investment.
Although Bank of England (BoE) policymakers remain divided over when is the right time for a rate hike, hawkish comments from Governor Andrew Bailey continue to boost bets for a hike next month.
Meanwhile, Prime Minister Boris Johnson is soon expected to announce £9.7bn of foreign investment in green technologies. This prospect, alongside UK inflation data this afternoon, will likely direct GBP movement.
Euro (EUR) Subdued by Dovish ECB Comments
The Euro (EUR) fell against several peers yesterday as the European Central Bank (ECB) maintained its dovish stance. Speaking this morning, Governing Council Member Olli Rehn insisted that the recent spike in inflation is ‘still mostly transitory’.
In addition, the Eurozone’s construction output for the month of August fell 4.1% below expectations.
Into today, Eurozone inflation is likely to influence Euro trading, along with German PPI data and a speech from the ECB’s Frank Elderson.
US Dollar (USD) Tumbles on Market Mood, Fed Accusations
The US Dollar (USD) fell through Tuesday’s session as accusations of unethical trading by Federal Reserve members reduced USD support.
Two regional Fed bank presidents resigned last month as it emerged that they were actively trading stocks in 2020; now, Fed Chair Jerome Powell himself is facing criticism.
US Dollar dynamics are likely to be influenced by Fed speeches in the early hours of this morning, in addition to risk sentiment and Treasury bond yields.
Canadian Dollar (CAD) Falls On WTI Downturn, Supply Constraints
The Canadian Dollar (CAD) faced headwinds yesterday as crude oil prices fail to sustain upside momentum. Poor Chinese GDP and retreating US factory output reflected slow economic recovery, denting oil demand prospects.
Also weighing upon CAD, Monday’s business outlook survey revealed that more and more firms are facing supply challenges.
Today’s inflation data is likely to drive movement, potentially diminishing CAD support if a further increase is revealed beyond the Bank of Canada (BoC)’s target range.
New Zealand Dollar (NZD) Retains Inflation Gains
The New Zealand Dollar (NZD) continued to firm against its peers on Tuesday as the currency remained supported by Monday’s inflation data, in addition to a risk-on mood and strong Australian Dollar.
Data Releases
Oct 20th 16:00 EUR German PPI (Sep) 1%
Oct 20th 16:00 GBP Inflation Rate (Sep) 3.2%
Oct 20th 17:20 EUR ECB Elderson Speech N/A
Oct 20th 19:00 EUR Inflation Rate Final (Sep) 3.4%
Oct 20th 22:30 CAD Inflation Rate (Sep) 4.3%
Oct 21st 03:00 USD Fed Quarles Speech N/A