Australian Dollar (AUD) Buoyed as US Inflation Falls
The Australian Dollar (AUD) was mixed during Wednesday’s session, following the release of Chinese inflation data.
China’s CPI printed at 2.7% rather than the 2.9% forecast, dampening AUD somewhat due to the ‘Aussie’s’ role as a proxy for China’s economy.
However, weakening US inflation lent subsequent support to the risk-off currency on hopes that global price pressures may soon begin to ease.
A lack of data leaves the Australian Dollar to trade on risk sentiment today. If the market mood remains upbeat, AUD could extend its gains.
New Zealand Dollar (NZD) Peaks amid Renewed Risk Appetite
The New Zealand Dollar (NZD) firmed yesterday following America’s disappointing CPI release.
Additionally, the ‘Kiwi’ was supported by rising prices across New Zealand’s main commodities – dairy and beef. Elsewhere, inflation expectations for NZD are lowering, although analysts observe that price pressures in New Zealand’s economy have not displayed meaningful exhaustion yet.
Today, the ‘Kiwi’ is likely to trade on external factors, although investors may be eyeing Friday’s business PMI for further trading impetus. Expectations of a fall to 49.2 could limit NZD gains.
Pound (GBP) Mixed on Cost of Living Concerns
The Pound (GBP) fluctuates against its peers in midweek trade, as a lack of economic data left GBP investors to focus on domestic headlines.
This prompted concern over the UK’s cost of living crisis, with GBP investors wary of the apparent inaction by the government over the UK’s impending energy price crunch.
The Pound may trade on market sentiment today, although US data may also influence GBP. As markets digest weakening inflation in America, Sterling may firm on hopes of a global economic recovery.
Euro (EUR) Fluctuates Amid Lack of Significant EU Data
The Euro (EUR) wavered on Wednesday as Germany’s finalised inflation data had little effect on the currency. The CPI printed as expected at 7.5%.
Instead, EUR found some support on US Dollar weakness, both ahead of and following America’s annualised inflation release. A downside in the ‘Greenback’ boosts the single currency on account of the strong negative correlation between EUR and USD.
Today, the Euro may continue to trade on ‘Greenback’ dynamics, given a further lack of significant EU data. If US PPI fell in July as forecast, EUR may climb.
US Dollar (USD) Drops Following US Inflation Release
The US Dollar (USD) fell yesterday following the release of below-forecast inflation figures.
The US CPI printed at 8.5% in July rather than 8.7% as predicted and down from 9.1% in June. The data reflects a softening of price rises, which subdues USD sentiment because investors believe it could deter the Federal Reserve from maintain its aggressive pace of monetary tightening.
Producer price inflation may influence ‘Greenback’ exchange rates today, further dampening USD if it dropped in July as forecast.
Canadian Dollar (CAD) Tumbles as Oil Prices Drop
The Canadian Dollar (CAD) weakened midweek as the price of crude oil fell in response to an anticipated weakening of demand.
Investors worried that a slowdown in the global economy may limit fuel consumption, while progress in attempting to revive the Iran nuclear accord also threatened to dent WTI prices, amid a potential increase in oil supplies.
Data Releases
Aug 11th 22:30 USD PPI (Jul) 10.4%
Aug 11th 22:30 USD Initial Jobless Claims (6/Aug) 263K