Australian Dollar (AUD) Weakens on Lack of Data
The Australian Dollar (AUD) sank against the majority of its peers yesterday, subdued by risk-off trading sentiment and a lack of significant Australian data.
Markets were bearish on account of volatile trading conditions amid fears of a global recession. A significant drop in the value of the Pound (GBP) may have unsettled markets, driving investors toward safe-haven currencies.
A further lack of data during today’s session could extend the ‘Aussie’s losses, though a turnaround in risk sentiment could inspire some strength for AUD.
New Zealand Dollar (NZD) Slumps Amid Bearish Market Mood
The New Zealand Dollar (NZD) likewise tumbled at the start of the week, depressed by downbeat market sentiment. A downturn in the Australian Dollar may have dampened ‘Kiwi’ support, given the currencies’ close trading relationship.
Into today, the ‘Kiwi’ is likely to continue trade on risk sentiment, potentially climbing if market mood improves.
Pound (GBP) Recovers Losses on BoE Rate Hike Hopes
The Pound crashed across the board at the end of last week as UK Chancellor Kwasi Kwarteng proposed significant tax cuts to prop up the British economy.
Downbeat assessments of the mini-budget continued to depress Sterling on Monday. As GBP approached parity against the US Dollar (USD), money markets panicked and UK government bond yields rose above those of Italy and Greece.
Sterling was able to recover some of its losses, however, on hopes that the Bank of England (BoE) would intervene with an emergency interest rate hike.
Today, any developments on that front will almost certainly direct GBP movement.
Euro (EUR) Retains Strength on Hawkish ECB Comments
While weakening against the US Dollar, the Euro (EUR) managed to firm against several peers yesterday, supported by hawkish comments from the European Central Bank (ECB).
In the early European session, German’s business climate indicator fell below expectations, exerting some headwinds. However, ECB President Christine Lagarde subsequently said the central bank expects to raise interest rates further over the next several meetings, capping losses for the single currency.
Additional comments from ECB officials could buoy EUR today, while potential risk-off sentiment may have a mixed effect.
US Dollar (USD) Firms as Weak Market Mood Attracts Safe-Haven Support
The US Dollar extended its bullish momentum at the beginning of the week, supported by risk-off sentiment and a hawkish outlook from the Federal Reserve Bank.
Following the Fed’s 75bps interest rate hike last week and alongside consistently hawkish rhetoric from Chairman Jerome Powell, markets are reassured of the central bank’s ‘tighter-for-longer’ policy stance.
Bullish expectations for the bank going forward have also helped push the 2-year US government bond yield to a 15-year high and the 10-year Treasury bond yields to an 11-year peak, supporting USD confidence.
US durable goods orders could limit further USD gains today if they fell in August as forecast.
Canadian Dollar (CAD) Drops as Oil Prices Fall on Demand Outlook
The Canadian Dollar (CAD) tumbled against its peers on Monday, subdued by falling oil prices. Investors feared that further economic weakness could sap demand for the black gold.
A lack of data today leaves the ‘Loonie‘ exposed to additional losses.
Data Releases
Sep 27th 20:15 USD Fed Evans Speech
Sep 27th 21:30 EUR ECB Lagarde Speech
Sep 27th 22:30 USD Durable Goods Orders (Aug) -0.4%
Sep 27th 23:55 USD Fed Bullard Speech