Australian Dollar (AUD) Falls on Risk-Off Sentiment
The Australian Dollar (AUD) fell yesterday as risk aversion dominated markets amidst concerns over the Omicron variant.
Comments from vaccine-maker Moderna’s chief executive had investors on edge: Stéphane Bancel remarked of the company’s Covid-19 vaccine ‘there is no world, I think, where [the effectiveness] is the same level … we had with Delta.’
Looking ahead, Australian’s Q3 GDP release is likely to apply further additional pressure to the ‘Aussie’ today, with a 2.7% contraction of growth expected.
Pound (GBP) Mixed amidst Covid Woes
The Pound (GBP) traded in a narrow range on Tuesday as a lack of data left with the currency without any strong directional bias.
While Brexit tensions remained unresolved, neither side threatened action – the Pound also represented a safer investment to traders than commodity currencies such as the Australian and Canadian Dollars.
Today’s finalised manufacturing PMI may provide further support – tomorrow’s speech from Bank of England (BoE) Governor Andrew Bailey may apply pressure if a dovish tone is struck.
Euro (EUR) Strengthens on EU Inflation, ECB Hawks
The Euro (EUR) gained on Tuesday, as strong Eurozone inflation pressured policymakers at the European Central Bank (ECB) to contemplate monetary policy action.
Jens Weidmann, outgoing ECB Governing Council member, said that the ECB should be wary of maintaining its very loose policy for longer than the price outlook dictates.
German retail sales may influence the Euro today– sales growth is expected to have increased in October, potentially acting as a tailwind for the single currency.
US Dollar (USD) Subdued Over Fed Tapering Bets
The US Dollar (USD) failed to capitalise on its safe-haven status yesterday, as the ‘Greenback’ fell in tandem with US Treasury bond yields.
Subsequently, markets were forces to revise expectations for the next rate hike from the Federal Reserve as the new Covid variant threatens to derail the global economic recovery.
Falling consumer confidence and a weaker-than-expected PMI from the Chicago Business Barometer also applied pressure.
Looking ahead, US employment data may revive the ‘Greenback’ later today, as economists forecast another robust expansion of employment growth last month.
Canadian Dollar (CAD) Pressured Despite High GDP
Better-than-expected GDP growth in the third quarter failed to lift the Canadian Dollar (CAD) on Tuesday, as oil prices plummeted. Concerns that the Omicron variant may derail the global economic recovery led to fears that oil demand could collapse, leading prices to fall sharply.
Tomorrow’s manufacturing PMI may exert further downside as activity is expected to have fallen in November.
New Zealand Dollar (NZD) Resists Significant Downside on Oversold Conditions
The New Zealand Dollar (NZD) traded mixed yesterday despite widespread risk aversion, as oversold conditions helped the ‘Kiwi’ to rebound. Gains were capped, however, by lower-than-expected business confidence.
Data Releases
Dec 1st 08:00 AUD Markit Manufacturing PMI Final (Nov) 58.5
Dec 1st 10:30 AUD GDP (Q3) -2.7%
Dec 1st 17:00 EUR German Retail Sales (Oct) 1%
Dec 1st 18:00 EUR ECB Non-Monetary Policy Meeting N/A
Dec 1st 18:55 EUR German Markit Manufacturing PMI Final (Nov) 57.6
Dec 1st 19:00 EUR Eurozone Markit Manufacturing PMI Final (Nov) 58.6
Dec 1st 19:30 GBP Markit/CIPS Manufacturing PMI Final (Nov) 58.2
Dec 1st 23:15 USD ADP Employment Change (Nov) 525K
Dec 2nd 00:00 GBP BoE Gov Bailey Speech N/A
Dec 2nd 00:30 CAD Markit Manufacturing PMI (Nov) 56
Dec 2nd 00:45 USD Markit Manufacturing PMI Final (Nov) 59.1
Dec 2nd 01:00 USD ISM Manufacturing PMI (Nov) 61