Australian Dollar (AUD) Boosted by Risk-On Mood
The Australian Dollar (AUD) climbed over the course of Monday amid a return of risk appetite. An uptick in iron ore prices also boosted the ‘Aussie’.
The prospect of a slower pace of tightening from the Reserve Bank of Australia (RBA) capped gains for AUD, however. The impact of widespread flooding in Australia also weighed on the ‘Aussie’.
Today’s release of the latest RBA meeting minutes could push the ‘Aussie’ lower if they maintain the central bank’s cautious tone.
New Zealand Dollar (NZD) Climbs amid Risk Appetite Return
A risk-on market mood helped the New Zealand Dollar (NZD) to make strong gains yesterday. On the other hand, gains for the ‘Kiwi’ were capped by a below-forecast services PMI.
A downtick in third quarter inflation could weigh on NZD exchange rates today.
Pound (GBP) Leaps as New Chancellor Announces Mini Budget U-Turn
The Pound (GBP) recovered lost ground on Monday after UK Chancellor Jeremy Hunt he would be scrapping the majority of his predecessor’s mini-budget.
The move helped restore confidence in the markets. The prospect of further political instability amid waning confidence in PM Liz Truss dented long-term confidence in Sterling, however.
With no significant data today, UK fiscal and political developments are likely to continue to drive movement in Sterling.
Euro (EUR) Slips as Kyiv Hit by Drone Attack
The Euro (EUR) dropped yesterday amid a risk-on mood in the markets. The worsening situation in the Russia-Ukraine conflict also dented confidence in the single currency on Monday.
News that the European Commission is set to present its gas price cap proposal this week underpinned EUR, however. Additionally, hawkish signals from the European Central Bank (ECB) also limited losses for the Euro.
Looking ahead, a slump in German economic sentiment could increase recession fears and weigh on the single currency.
US Dollar (USD) Falls Despite Bets on Bumper Fed Rate Hike
The US Dollar (USD) slipped yesterday amid a positive risk appetite. A pullback in US Treasury bond yields prompted further losses for USD on Monday.
On the other hand, strong market expectations for a 0.75% interest rate hike from the Federal Reserve underpinned the currency. Markets have priced in a nearly 100% chance of such a move amid hawkish signals from Fed officials.
An uptick in industrial production figures could help boost the ‘Greenback’ later today.
Canadian Dollar (CAD) Volatile amid Poor Oil Outlook
Trade in the Canadian Dollar (CAD) was mixed on Monday. A risk-on mood bolstered CAD against safer currencies, although a poor-long term outlook for crude oil prompted losses elsewhere.
The commodity-tied ‘Loonie’ is likely to be affected by changes in oil prices today.
Data Releases
Oct 18th 07:45 NZD Inflation Rate (Q3) 1.6%
Oct 18th 10:05 AUD RBA Bullock Speech
Oct 18th 10:30 AUD RBA Meeting Minutes
Oct 18th 19:00 EUR ZEW German Economic Sentiment Index (Oct) -66
Oct 18th 19:00 EUR German ZEW Economic Sentiment Index (Oct) -65.7