Australian Dollar (AUD) Rises as Risk Appetite Improves
The Australian Dollar (AUD) climbed at the beginning of the week as risk-on trading sentiment supported the currency.
Despite a lack of domestic data, AUD also enjoyed tailwinds on account of China’s positive trade balance: July’s surplus increased to $101.26bn rather than dropping to $90bn as forecast.
Today, confidence data may buoy the ‘Aussie’- both consumer and business confidence are expected to have improved.
New Zealand Dollar (NZD) Buoyed as Commodities Appreciate
The New Zealand Dollar (NZD) likewise rose during yesterday’s session, bolstered by commodity prices and an upbeat market mood.
A lack of data leaves NZD to trade on external factors today. If risk appetite remains strong, the New Zealand Dollar may make further gains.
Pound (GBP) Firms despite Recession Fears
The Pound (GBP) trended broadly higher on Monday in spite of forecasts for an economic contraction in Q2.
Following Friday’s downbeat projections from the Bank of England (BoE), which suggest the UK will experience a recession in Q4, yesterday’s predictions of a GDP contraction in Q2 dented GBP Sterling sentiment further still. Nevertheless, risk-on trading capped GBP losses.
Today’s data from the British Retail Consortium (BRC) could reverse Pound gains if it reveals a fall in UK retail sales as expected.
Euro (EUR) Drops Amid Quiet Trading Conditions
The Euro (EUR) fell against several peers at the beginning of the week, as a lack of data exposed the currency to losses.
Risk-on trading lent some support to the single currency against its perceived riskier peers, but gains were capped over ongoing worries that the bloc is facing a recession.
An lack of data leaves the Euro to trade on risk sentiment today; the currency may also take direction from US Dollar (USD) dynamics.
US Dollar (USD) Weakened by Risk-On Mood
The US Dollar (USD) lost support yesterday as a risk-on market mood undermined demand for the safe-haven currency.
The USD rally ran out of steam following Friday’s impressive payrolls data; a lack of releases on Monday capped ‘Greenback’ gains, while investors were cautious of placing bullish bets ahead of tomorrow’s inflation release.
Next in the docket, an increase in economic optimism for the month of August may lend USD some tailwinds. The IBD/TIPP index is expected to rise to 38.6 in August.
Canadian Dollar (CAD) Wavers as Crude Oil Sinks
The Canadian Dollar (CAD) traded in a mixed range on Monday, dented by crude oil depreciation but supported somewhat by risk-on sentiment.
Elsewhere, CAD exchange rates were also influenced by suggestions that the Bank of Canada (BoC) cannot keep up with the Federal Reserve’s policy tightening schedule. Economists remark that even at 75bps hike in September won’t be bullish for the ‘Loonie’ if the market sees that as the end of the BoC’s tightening cycle.
Data Releases
Aug 9th 09:01 GBP BRC British Retail Sales Monitor (Jul) -1.1%
Aug 9th 10:30 AUD Westpac Consumer Confidence Change (Aug) 1.4%
Aug 9th 11:30 AUD NAB Business Confidence (Jul) 2
Aug 10th 00:00 USD IBD/TIPP Economic Optimism (Aug) 38.6