Australian Dollar (AUD) Rises as Risk Appetite Improves
The Australian Dollar (AUD) firmed yesterday as the European session opened on a risk-positive note and both coal and iron ore – Australia’s key exports – gained in value.
There were no Australian data releases featured in the docket, but the ‘Aussie’ may have found additional support on news that China was adding another treatment to its arsenal in the fight against Covid-19.
Today, a further lack of AU data leaves AUD to trade on risk sentiment: if a risk-on mood persists, the Australian Dollar may climb further.
New Zealand Dollar (NZD) Wavers on Lack of Trading Stimuli
The New Zealand Dollar (NZD) fluctuated against different peers on Monday as a lack of significant data left the currency exposed to external factors.
While key commodities – dairy and beef – held onto recent gains, an uptick in the ‘Kiwi’s sister currency failed to buoy NZD. Some analysts attributed this to rising fears of a global recession, which is pushing consumer confidence lower.
The New Zealand Dollar may cement losses today, as the NZ docket remains sparse. On the other hand, risk-on sentiment could lend some tailwinds.
Pound (GBP) Firms on Upbeat Sentiment, Improving Business Optimism
The Pound (GBP) rose at the beginning of the week, bolstered by upbeat trading sentiment and an improvement in CBI business optimism.
According to the Confederation of British Industry, the business optimism index cut its losses in Q3 by thirteen points, printing at -21 rather than the -45 expected. Investment intentions improved overall, and employment within the sector continued to grow at a robust pace.
Today, distributive trades index could reverse some of these gains if sales volumes fell again this month.
Euro (EUR) Trades Mixed Following Ifo Report
The Euro (EUR) wavered against its peers yesterday following the release of July’s Ifo business climate data. The index printed below expectations at 88.6, as German business morale fell in July to its lowest level in over two years.
EUR was able to avoid significant losses, however, as the European Central Bank (ECB)’s Martins Kazaks told Bloomberg that a further ‘quite significant’ rate increase may be needed in September.
The single currency may be affected by US Dollar (USD) trading today, given a lack of EU data. USD dynamics often influence the Euro on account of the pair’s strong negative correlation.
US Dollar (USD) Subdued on Bullish Market Mood
The US Dollar was depressed on Monday as an upbeat market mood sapped appeal for the safe-haven currency.
Also weighing upon the ‘Greenback’ was the Chicago Federal Reserve’s national activity index, which printed at -0.19 in June rather than the 0.05 expected. The index remains at low levels not seen since February 2021, indicating below-average economic growth.
Tomorrow’s consumer confidence data may dent USD support further if it declines on June’s reading as expected. The release is expected to print at 97.3 from 98.7 last month.
Canadian Dollar (CAD) Jumps on Rebounding Oil Prices
The Canadian Dollar (CAD) edged higher at the start of the week, as crude oil prices increased.
The commodity-linked ‘Loonie’ was buoyed as oil prices rebounded over 4% from a one-week low touched early in Monday’s European session.
Data Releases
Jul 26th 20:00 GBP CBI Distributive Trades (Jul) -9
Jul 27th 00:00 USD CB Consumer Confidence (Jul) 97.3