Australian Dollar (AUD) Stumbles as Market Mood Sours
The Australian Dollar (AUD) slipped on Friday as a downbeat mood swept markets, thereby sapping the appeal of the risk-sensitive ‘Aussie’.
In addition, Australia’s PPI report printed marginally below expectations. This slightly dampened Reserve Bank of Australia (RBA) interest rate rise bets, adding to AUD’s woes.
Looking ahead, Australia’s preliminary retail sales data for September could boost AUD today. Economists expect sales to have grown by a further 0.6% last month, echoing August’s rise.
New Zealand Dollar (NZD) Undermined by Risk-Off Trade
The New Zealand Dollar (NZD) initially jumped on Friday as traders increased expectations for a 75bps rate hike at the Reserve Bank of New Zealand’s (RBNZ) next policy decision.
However, the increasingly gloomy market mood dragged the risk-sensitive ‘Kiwi’ lower. NZD exchange rates relinquished most of their gains.
In the absence of market-moving New Zealand data today, the ‘Kiwi’ could trade on risk appetite and its positive correlation with the ‘Aussie’.
Pound (GBP) Wavers Near Highs in Absence of Data
The Pound (GBP) was mixed during Friday’s session, wobbling against many of its peers but holding most of the week’s gains.
The unclear movement came amid a lack of UK economic data and a relatively quiet day in UK politics, following the recent chaos. Hopes that new Prime Minister Rishi Sunak will effectively run the country kept GBP afloat.
New lending data from the Bank of England (BoE) tonight could impact GBP exchange rates. Otherwise, domestic UK political news could continue to drive Sterling.
Euro (EUR) Struggles despite Strong German Data
Despite some positive Eurozone data on Friday, the Euro (EUR) failed to make notable gains. German GDP growth and inflation printed higher than forecast, raising hopes that tonight’s Eurozone data will also be better than initially anticipated.
EUR’s negative correlation with a stronger US Dollar (USD) prevented the single currency from capitalising on the upbeat data, however.
Turning to the week ahead, Eurozone GDP and inflation tonight could have a huge impact on EUR exchange rates. Weak GDP growth and easing inflation would likely see the Euro slump.
US Dollar (USD) Gains Capped as Inflation Misses Forecasts
As risk aversion returned to markets on Friday, the safe-haven US Dollar initially enjoyed renewed strength.
However, mixed US inflation data later in the session saw USD pare its gains. Core inflation missed forecasts, as did wage inflation, putting less pressure on the Federal Reserve to continue aggressively tightening interest rates.
American economic data is thin on the ground today. As a result, risk appetite could drive USD.
Canadian Dollar (CAD) Softens as Oil Prices Slip
The Canadian Dollar (CAD) declined against many of its peers on Friday. Muted oil prices, Canadian government bonds and GDP all left CAD with very little support.
With Canadian data thin on the ground today, crude prices could drive the commodity-linked ‘Loonie’.
Data Releases
Oct 31st 11:30 AUD Retail Sales MoM Prel (Sep) 0.6%
Oct 31st 18:00 EUR German Retail Sales MoM (Sep) -0.3%
Oct 31st 20:30 GBP BoE Consumer Credit (Sep £1.2bn
Oct 31st 21:00 EUR GDP Growth Rate QoQ Flash (Q3) 0.2%
Oct 31st 21:00 EUR Inflation Rate YoY Flash (Oct) 9.8%