Australian Dollar (AUD) Struggles to Hold onto Gains
The Australian Dollar (AUD) enjoyed some support on Wednesday, buoyed by risk-on tailwinds and positive Chinese PMI data.
Into the European session, however, AUD weakened as market sentiment soured and investors eyed Australia’s poor construction data. Furthermore, economists fear an economic recession amid surging global inflation.
Today, the Ai Group’s manufacturing index may suppress further gains for the ‘Aussie’, if it drops to 51 in August as expected.
New Zealand Dollar (NZD) Trades Mixed Following Confidence Data
The New Zealand Dollar (NZD) was bolstered yesterday as New Zealand’s ANZ business confidence release printed at -47.8: better than forecasts of -55 and the highest reading since April.
Later in the day, risk-off headwinds reversed some of the ‘Kiwi’s’ gains, along with intermittent weakness in the Australian Dollar.
A lack of domestic data leaves NZD to trade on external factors today. If AUD drops against its peers, the New Zealand Dollar may likewise weaken.
Pound (GBP) Slumps amid Recession Fears and Inflation Forecasts
The Pound (GBP) fell steeply against its peers in midweek trade, pressured by a fall in 10-year UK government bonds.
Rising bond yields illustrate demand for a higher return on investment, as inflation in the UK soars and traders anticipate successive interest rate hikes from the Bank of England (BoE).
Finalised UK PMI data is unlikely to influence Sterling today, unless it varies drastically from earlier readings. Manufacturing activity in August is expected to have fallen to 46.
Euro (EUR) Wavers Following Inflation Data
The Euro (EUR) trended broadly higher on Wednesday, though gains were capped by gas price dynamics.
Data from the Eurozone buoyed the single currency, revealing that consumer price inflation rose by 9.1% in the year to August. The news encouraged speculation that the European Central bank (ECB) may hike interest rates by 75bps in September.
Today, Germany’s latest retail sales figures are expected to report sales growth stalled in July, potentially denting EUR sentiment. Likewise, unemployment in the bloc is expected to print at 6.6%, the same as in July.
US Dollar (USD) Rebounds despite ADP Data
The US Dollar (USD) continued to firm against its peers yesterday despite the release of weak employment data.
Private businesses in the US hired 132K workers last month, compared with 268K in July – the smallest number since the start of 2021. Economists suggested US businesses may be shifting towards a more conservative pace of hiring.
ISM manufacturing data may dent USD exchange rates first thing tomorrow if manufacturing activity slowed in August as forecast.
Canadian Dollar (CAD) Falls on Economic Contraction
The Canadian Dollar (CAD) slumped midweek as GDP data reported a surprise contraction in economic growth in July.
Canada’s manufacturing PMI could further limit CAD gains today if August’s activity slowed to 51 from 52.5 in July.
Data Releases
Sep 1st 08:30 AUD Ai Group Manufacturing Index (Aug) 51
Sep 1st 08:30 USD Fed Bostic Speech N/A
Sep 1st 09:00 AUD S&P Global Manufacturing PMI Final (Aug) 54.5
Sep 1st 16:00 EUR German Retail Sales (Jul) 0%
Sep 1st 17:55 EUR German S&P Global Manufacturing PMI Final (Aug) 49.8
Sep 1st 18:00 EUR S&P Global Manufacturing PMI Final (Aug) 49.7
Sep 1st 18:30 GBP S&P Global/CIPS Manufacturing PMI Final (Aug) 46
Sep 1st 19:00 EUR Unemployment Rate (Jul) 6.6%
Sep 1st 22:30 USD Initial Jobless Claims (27/Aug) 248K
Sep 1st 23:30 CAD S&P Global Manufacturing PMI Final (Aug) 51
Sep 1st 23:45 USD S&P Global Manufacturing PMI Final (Aug) 51.3
Sep 2nd 00:00 USD ISM Manufacturing PMI (Aug) 52
Sep 2nd 05:30 USD Fed Bostic Speech N/A