Australian Dollar (AUD) Buoyed by Rate Hike Expectations
The Australian Dollar (AUD) rose against the majority of its peers yesterday as Wednesday’s trimmed mean inflation continued to underpin hopes of an early interest rate hike from the Reserve Bank of Australia (RBA).
Trimmed mean CPI rose 2.1% year-on-year in the third quarter, the most since 2015, as prices rose for food, health, insurance and financial services.
Looking ahead, September’s preliminary retail sales figures may influence trading this morning. Sales are expected to contract – although not to the same extent as in August.
Pound (GBP) Muted as Investors Digest Autumn Budget
On the whole, Rishi Sunak’s autumn budget was received well – the Pound (GBP) traded in a mixed range on Thursday, however, as investors thought over its implications.
Initially, focus was on lower government debt, firmer growth and lower unemployment, as well as well-needed cash injections across healthcare and education. Fresh analyses on Thursday then brought the Chancellor’s £40bn tax rise into the spotlight.
Today, attention will fall upon the Bank of England (BoE)’s consumer credit data for September.
Euro (EUR) Rises Following German Inflation, ECB Press Conference
The Euro (EUR) firmed yesterday afternoon in the wake of upbeat employment data and higher-than-expected inflation from Germany, and slightly more hawkish comments from the European Central Bank (ECB).
Ever-higher inflation increases investors’ hopes of imminent monetary policy tightening measures: although ECB President Christine Lagarde reiterated that interest rates will remain low until inflation is sustained at 2%, the bank is willing to ‘adjust all of its instruments’ as necessary.
The Eurozone’s GDP release today is likely to impact EUR exchange rates, with an expected slowing of growth in the third quarter potentially denting the appeal of the Euro.
US Dollar (USD) Stumbles as US GDP Misses Expectations
The US Dollar (USD) fell on Thursday’s session, as GDP slipped from 6.7% in the second quarter to 2% in Q3, missing expectations of 2.7%. The contraction in growth came amidst a surge in Covid-19 cases, fading government stimulus, global supply constraints and labour shortages.
According to the US Bureau of Economic Analysis (BEA), a sharp slowdown in consumer spending dented GDP, as spending accounts for roughly two-thirds of growth.
The PCE price index later today is likely to influence US Dollar trading, with the Federal Reserve’s preferred measure of inflation potentially buoying the ‘Greenback’ if it points to another rise in inflation last month.
Canadian Dollar (CAD) Wavers as Fuel Prices Slide
The Canadian Dollar (CAD) traded down overall yesterday, as oil prices fell from Tuesday’s highs. WTI Crude marked its largest one-day drop since 4 August.
GDP data this evening may impact Canadian Dollar exchange rates: the Canadian economy is expected to grow 0.7% in August.
New Zealand Dollar (NZD) Climbs on Risk-On Mood
The New Zealand Dollar (NZD) firmed on Thursday as a risk-on market mood supported the ‘Kiwi’. Rising inflation expectations also boosted NZD sentiment.
Data Releases
Aug 29th 10:30 AUD Retail Sales Prelim (Sep) -0.9%
Aug 29th 10:30 AUD PPI (Q3) 1.4%
Aug 29th 18:00 EUR German GDP Growth Rate Flash (Q3) 2.2%
Aug 29th 18:30 GBP BoE Consumer Credit (Sep) £0.45bn
Aug 29th 19:00 EUR Eurozone Inflation rate Flash (Oct) 3.7%
Aug 29th 19:00 EUR Eurozone GDP Growth Rate Flash (Q3) 2%
Aug 29th 22:30 CAD GDP (Aug) 0.7%
Aug 29th 22:30 USD PCE Price Index (Sep) 4.4%
Aug 29th 23:45 USD Chicago PMI (Oct) 63.5
Aug 30th 00:00 USD Michigan Consumer Sentiment Final (Oct) 71.4