Australian Dollar (AUD) Slips despite RBA Rate Hike
The Australian Dollar (AUD) fell yesterday despite a 0.5% interest rate hike from the Reserve Bank of Australian (RBA). A risk-on market impulse also failed to buoy the ‘Aussie’.
AUD likely saw headwinds amid dovish signals from the RBA following its interest rate decision.
Looking to the day ahead, the impact of second quarter GDP data and China’s trade figures could drive movement in the currency.
New Zealand Dollar (NZD) Dips alongside AUD
The New Zealand Dollar (NZD) slipped on Tuesday due to its positive correlation to the Australian Dollar (AUD).
With no significant data for NZD today, the currency is likely to continue to be driven primarily by its correlation to AUD.
Pound (GBP) Strengthened by Promises of Household Support
The Pound (GBP) made gains yesterday after the appointment of Liz Truss as the UK’s new Prime Minister brought some stability to the currency.
Reports that Truss will soon announce a sizeable energy support package for UK businesses and households may have also buoyed Sterling.
In the lack of any significant data, the direction of the pound is likely to remain tied to UK political developments, with GBP investors looking for more clarity regarding Truss’ economic policies.
Euro (EUR) Falls as Energy Crisis Continues
The Euro (EUR) found some support early on Tuesday amid a USD sell-off. Poor factory order figures from Germany may have acted a headwind for EUR, however.
Ultimately fears of a Eurozone recession continued to weigh on the single currency. The trading bloc’s outlook continued to suffer amid the extended closure of the Nord Stream 1 pipeline.
Looking to today for the Euro, confirmation of an uptick in Eurozone GDP in the second quarter could strengthen the currency.
US Dollar (USD) Soars as Fed Rate Hike Bets Intensify
The US Dollar (USD) climbed close to a two-decade high on Tuesday amid resurgent demand for the safe-haven ‘Greenback’.
Elevated Federal Reserve interest rate hike bets on the back of a stronger-than-expected ISM non-manufacturing PMI may have also pushed the US Dollar higher.
Later today, a predicted widening in the US trade deficit could weigh on the currency. On the other hand, speeches from multiple Fed policymakers could boost the currency if they remain broadly hawkish.
Canadian Dollar (CAD) Firms Despite Drop in Oil Prices
The Canadian Dollar (CAD) rose on Tuesday despite a slump in crude oil prices. A risk-on market mood helped to bolster the commodity-tied ‘Loonie’.
Looking ahead, investors will be eagerly awaiting the Bank of Canada’s (BoC) interest rate decision. Will another aggressive hike bolster CAD exchange rates?
Data Releases
Sep 7th 11:30 AUD GDP Growth Rate (Q2) 1%
Sep 7th 19:00 EUR GDP (Q2) 0.6%
Sep 7th 22:30 CAD Balance of Trade (Jul) C$3.8bn
Sep 7th 22:30 USD Balance of Trade (Jul) $-70.3bn
Sep 8th 00:00 CAD Ivey PMIs (Aug) 48.8
Sep 8th 00:00 CAD BoC Interest Rate Decision 3.25%