Australian Dollar (AUD) Wavers on Mixed Trading Stimulus
The Australian Dollar (AUD) attempted a rebound on Thursday, inspired by hawkish expectations for the Reserve Bank of Australia (RBA).
Gains were capped, however, by downbeat international and domestic data. In China, manufacturing activity contracted according to the Caixin PMI, while Australia’s finalised manufacturing PMI likewise fell short of expectations.
Today, the ‘Aussie’ is likely to trade on risk sentiment given a lack of domestic data. If the mood remains downbeat, AUD may trend lower.
New Zealand Dollar (NZD) Trades Sideways as Chinese Data Disappoints
The New Zealand Dollar (NZD) likewise traded in a narrow range yesterday, subdued by a lack of domestic economic data.
As with the ‘Aussie’, NZD sentiment was dented by downbeat data from China, given the countries’ close trading relationship. Furthermore, AUD weakness invariably weighs upon the ‘Kiwi’.
Commodity price dynamics could influence NZD exchange rates today, alongside risk appetite. If the value of dairy products continues to fall, the ‘Kiwi’ may weaken.
Pound (GBP) Pressured by Pessimistic Economic Forecasts
The Pound (GBP) dropped against its peers towards the end of the week, as UK manufacturing activity contracted, and researchers warned of intensifying consumer price pressures ahead.
Experts at the Resolution Foundation published a new report forecasting that the living standards crisis will extend into next year, with household incomes set to fall by 5% this year and 6% in 2023.
Today, bearish market sentiment may depress GBP further, amid a lack of UK data to provide fresh stimulus.
Euro (EUR) Slumps on Recession Fears, USD Strength
The Euro (EUR) had found support earlier in the week from reassurances that the European Commission was working on an emergency package to offset soaring energy costs.
Following the announcement, gas prices fell on Thursday – but the single currency remained under pressure amid forecasts of a recession. Analysts at Fitch Ratings remarked that a full shut-off of Russian gas supplies to the EU is a possibility, which would have a significant impact on GDP.
Germany’s balance of trade for July will be published today, possibly applying headwinds if the country’s surplus narrowed to €6.2bn as expected.
US Dollar (USD) Trades at 20-Year High on Positive Data Releases
The US Dollar (USD) climbed against its peers on Thursday as risk-off sentiment lent tailwinds, followed by better-than-expected jobless and manufacturing data.
August’s ISM manufacturing PMI printed at 52.8 rather than weakening to 52 as expected: markets responded positively to news that business activity expanded at the same pace as in July.
Today, ‘Greenback’ performance may be influenced by August’s jobs report. If the US participation rate slowed last month and average earnings increased by less than in July, USD could experience headwinds.
Canadian Dollar (CAD) Firms despite Oil Price Downturn
The Canadian Dollar (CAD) rose yesterday despite falling oil prices and an unexpected contraction in the country’s manufacturing sector in August.
‘Loonie’ gains may have been triggered by CAD’s comparative strength against perceived-riskier currencies.
Data Releases
Sep 2nd 16:00 EUR German Balance of Trade (Jul) €6.2bn
Sep 2nd 19:00 EUR PPI (Jul) 35.8%
Sep 2nd 22:30 USD Non-Farm Payrolls (Aug) 300K
Sep 2nd 22:30 USD Unemployment Rate (Aug) 3.5%
Sep 2nd 22:30 USD Average Hourly Earnings (Aug) 0.4%
Sep 3rd 00:00 USD Factory Orders (Jul) 0.2%