Australian Dollar (AUD) Bolstered by Solid Government Budget
The Australian Dollar (AUD) firmed on Tuesday after the unveiling of the Labour government’s first budget. Markets took heart from promises of sensible spending and support for the Reserve Bank of Australia (RBA).
A risk-off mood capped gains for AUD, however. Rising Chinese Covid-19 case levels and downbeat economic data from the world’s second-largest economy also weighed on the currency.
If third quarter inflation rises as forecast, then it could push AUD higher today as it bolsters RBA rate hike bets.
New Zealand Dollar (NZD) Boosted by Positive AUD Correlation
The New Zealand Dollar (NZD) benefitted from its positive correlation to the Australian Dollar yesterday. Dovish signals from the Reserve Bank of New Zealand (RBNZ) kept gains limited, however.
A drop in October’s business confidence could weigh on the ‘Kiwi’ if figures print as forecast today.
Pound (GBP) Jumps as Sunak Takes Office as PM
The Pound (GBP) was bolstered on Monday as Rishi Sunak became the UK’s newest Prime Minister. UK government bond yields fell as he assumed office.
Supportive comments from Bank of England (BoE) Deputy Governor Dave Ramsden also helped GBP to climb. Ramsden stated that the fall in bond yields signalled Sunak’s ‘credibility’.
With no significant data today, the Pound is likely to continue to be affected by confidence in Sunak’s premiership.
Euro (EUR) Climbs amid Risk-Off Mood
The Euro (EUR) firmed yesterday amid a drop in global risk appetite. Bets on another bumper interest rate hike from the European Central Bank (ECB) also lent support to the single currency.
Warnings of an imminent recession in Germany, the trading bloc’s largest member, kept gains for EUR limited however. The latest IFO survey reported a drop in German business confidence in October.
The Euro will see no significant data today, meaning the single currency is likely to affected by risk appetite.
US Dollar (USD) Falls as Consumer Confidence Tumbles
The US Dollar (USD) slipped on Monday despite a risk-off mood. The ‘Greenback’ saw a sharp sell-off amid a paring back of Federal Reserve interest rate hike bets.
A drop in consumer confidence in October also weighed on USD. The index fell to 102.5 from 107.8 as consumers remained concerned over the impact of soaring inflation.
Looking ahead, the US Dollar may continue to struggle today if USD investors continue to scale back their Fed rate hike bets.
Canadian Dollar (CAD) Falls as Oil Prices Tumble
The Canadian Dollar (CAD) slipped yesterday. The commodity-tied ‘Loonie’ was pulled lower by sliding crude oil prices as demand fears persisted.
The currency is likely to be affected by further fluctuations in the price of oil today.
Data Releases
Oct 26th 03:55 USD Fed Waller Speech
Oct 26th 10:00 NZD ANZ Business Confidence (Oct) -32
Oct 26th 10:30 AUD Inflation Rate (Q3) 7%