Australian Dollar (AUD) Softens as Confidence Data Prints Mixed
The Australian Dollar (AUD) slipped on Tuesday following mixed data releases in the Asian session.
Westpac bank’s consumer confidence index fell to 81.2 in August from 83.8 in July – down for the ninth month in a row. Subsequently, NAB business confidence index printed at 7 rather than 2 as expected, but failed to boost the struggling Australian Dollar.
Today, Chinese inflation may influence ‘Aussie’ exchange rates – if the country’s CPI advances towards its 3% target, AUD could climb.
New Zealand Dollar (NZD) Succumbs to Headwinds
The New Zealand Dollar (NZD) dropped against several peers yesterday as recession fears and tensions between America and China appeared to weigh upon the ‘Kiwi’.
A generally downbeat market mood also capped gains: the 10-year US Treasury bond yield moved sideways as US stock index futures were flat in the European morning session. Adding additional pressure, NZ commodities traded in a mixed range.
Looking ahead, Chinese data could affect influence the New Zealand Dollar, alongside Australian Dollar dynamics. An upturn in the ‘Aussie’ may bolster NZD exchange rates today.
Pound (GBP) Fluctuates, Buoyed by BRC Monitor
The Pound (GBP) ticked up against several peers on Tuesday, supported by a better-than-expected report from the British Retail Consortium (BRC).
The BRC’s retail sales monitor revealed that UK sales grew by 1.6% in July, on an annualised basis – rather than shrinking by 1.1% as expected. Gains were capped, however, by cautious trading sentiment.
A lack of data may leave Sterling without any strong directional bias today. If risk appetite improves, GBP could extend its gains – ongoing inflation concerns may limit Pound appeal, however.
Euro (EUR) Climbs despite Quiet Trading Conditions
The Euro (EUR) was buoyed through yesterday’s session despite a lack of significant EU data and signs of an economic slowdown.
Given the currencies’ strong negative correlation, a downside in the US Dollar lent some support to the single currency; gains were capped, however, by fears that worsening EU retail data and manufacturing output could signal an economic contraction ahead.
Today, finalised German inflation data may influence the Euro if it differs from earlier estimates; the US CPI may have a greater impact, however, as USD upside is likely to dent EUR sentiment.
US Dollar (USD) Tumbles as Investors Eye CPI Release
The US Dollar (USD) weakened against its peers on Tuesday ahead of today’s inflation data. Investors were hesitant of placing bullish bets in the lead up to the release.
If headline CPI fell to 8.7% in July as expected, the ‘Greenback’ could slide lower as Federal Reserve rate hike bets would likely ease. On the other hand, less aggressive monetary policy tightening could help to limit the likelihood of a recession.
While US inflation is likely to be the main trading stimulus for USD today, risk sentiment may lend some support to the currency if markets turn bearish.
Canadian Dollar (CAD) Dips despite Rise in Oil Prices
The Canadian Dollar (CAD) sank yesterday despite increasing crude oil prices. WTI jumped following reports that Russia had suspended oil exports via the southern leg of the Druzhba pipeline.
Russia’s pipeline monopoly claimed that its payment to Ukrainian operator Ukrtransnafta, which transports oil to Europe, did not go through due to Western sanctions.
Data Releases
Aug 10th 16:00 EUR German Inflation Rate Final (Jul) 7.5%
Aug 10th 22:30 USD Inflation Rate (Jul) 8.7%