Australian Dollar (AUD) Strengthens as Risk Appetite Increases
An improving market mood bolstered the risk-sensitive Australian Dollar (AUD) on Friday.
AUD had initially come under pressure following weaker Chinese inflation data. However, the prospect of further economic stimulus measures from the People’s Bank of China (PBoC) cheered markets and boosted the ‘Aussie’.
Looking ahead, risk appetite could continue to drive the Australian Dollar today. Will a prevailing bullish mood push AUD higher?
New Zealand Dollar (NZD) Boosted by Return of Risk Appetite
The risk-sensitive New Zealand Dollar (NZD) also benefitted from a return of risk appetite over the course of Friday.
Investors were upbeat about the likelihood of a pause in the US Federal Reserve’s rate hiking cycle.
NZD has no data on the calendar for today. This means that the ‘Kiwi’ could be buoyed by a risk-on mood.
Pound (GBP) Gains as Markets Bet on Further BoE Hikes
The Pound (GBP) edged higher at the end of last week as markets continued to price in further rate hikes from the Bank of England (BoE).
Bets on Sterling were limited amid thin trading conditions, however, due to an absence of UK economic data.
Data remains thin on the ground today, which may limit GBP movement. Traders are likely looking ahead to the latest labour market overview due out on Tuesday afternoon.
Euro’s (EUR) Downside Limited by Bets on ECB Policy Tightening
The Euro (EUR) saw losses at the end of last week. A downward revision to Eurozone GDP on Thursday that confirmed a recession for the bloc continued to dent confidence in EUR.
Bets on a 25bps rate hike from the European Central Bank (ECB) at their meeting this week cushioned the single currency’s losses, though.
Today could see the Euro regain more lost ground if markets continue to bet on hawkish action from the ECB.
US Dollar (USD) Slides as Markets Bet on Fed Policy Pause
The US Dollar (USD) weakened on Friday amid speculation that the Federal Reserve would leave interest rates unchanged at its meeting this week.
Additionally, an improving market mood dampened enthusiasm for the safe-haven currency.
Amid a lack of US data today, and ahead of the Fed decision later in the week, USD could be subdued.
Canadian Dollar (CAD) Undermined by Rising Unemployment
The Canadian Dollar (CAD) fluctuated on Friday as volatility in the oil markets impacted the crude-linked ‘Loonie’. A larger-than-forecast rise in Canadian unemployment then dented the currency in the evening.
With no data available for CAD today, oil price dynamics could drive the currency.