Australian Dollar (AUD) Rallies on Upbeat Market Mood
The Australian Dollar (AUD) found renewed strength as the week opened courtesy of an improving market mood. Sentiment was buoyed by hopes that rate hiking cycles are finally nearing their end.
The China-proxy ‘Aussie’ was also boosted by the prospect of further stimulus measures from Beijing to shore up China’s post-Covid recovery.
This afternoon sees the Reserve Bank of Australia (RBA) deliver its latest interest rate decision. There is a degree of uncertainty whether the bank will raise rates this month, which may inject some volatility into the Australian Dollar.
New Zealand Dollar (NZD) Climbs amid Recovering Sentiment
The New Zealand Dollar (NZD) also firmed on Monday as market risk sentiment improved. Investors are increasingly hopeful we will avoid a global recession this year.
Turning to today, a lack of economic data will leave the ‘Kiwi’ exposed to market sentiment. If moods continue to improve, the New Zealand Dollar could remain supported.
Pound (GBP) Kept Afloat by Rate Hike Bets
The Pound (GBP) traded narrowly yesterday amid the absence of any notable UK economic releases.
Sterling was also subdued as GBP investors were reluctant to reposition ahead of the Bank of England’s (BoE) upcoming interest rate decision.
This evening the UK will publish its finalised manufacturing PMI for July. This is set to confirm the UK’s factory sector suffered another contraction and may weigh on GBP.
Euro (EUR) Supported by Surprise Economic Growth
The Euro (EUR) traded with mixed success on Monday after Eurozone inflation cooled for the third consecutive month.
Lending some support to the Euro was better-than-expected GDP figures. The bloc’s economy expanded by 0.3% in the second quarter, after stalling at the start of the year.
Turning to today, the Eurozone’s finalised manufacturing PMI figures could drag the Euro lower if preliminary figures prove true. Lingering concerns over the Eurozone economy could sap demand.
US Dollar (USD) Pressured by Upbeat Market Mood
US Dollar (USD) struggled to attract support yesterday amid an upbeat market mood. With safe-haven flows drying up, demand waned for the ‘Greenback’.
USD demand was also pressured by a modest drop in US Treasury yields.
The publication of the latest ISM manufacturing PMIs could place additional pressure on the US Dollar today as they are forecast to report another contraction in factory activity last month.
Canadian Dollar (CAD) Surges on Recovering Oil Prices
The commodity-linked Canadian Dollar (CAD) strengthened at the start of this week as the commodity-linked ‘Loonie’ rose in tandem with oil prices.
CAD exchange rates may continue to climb today, assuming the uptick in oil prices persists.
Data Releases
Aug 1st 09:00 AUD Judo Bank Manufacturing PMI Final (Jul) 49.6
Aug 1st 14:30 AUD RBA Interest Rate Decision 4.35%
Aug 1st 17:55 EUR DE – Unemployment Rate (Jul) 5.7%
Aug 1st 18:00 EUR EA – HCOB Manufacturing Final (Jul) 42.7
Aug 1st 18:30 GBP S&P Global Manufacturing PMI Final (Jul) 45
Aug 1st 19:00 EUR EA – Unemployment Rate (Jun) 6.5%
Aug 1st 23:30 CAD S&P Global Manufacturing PMI (Jul) 48.3
Aug 2nd 00:00 USD ISM Manufacturing PMI (Jul) 46.8