Australian Dollar (AUD) Buoyed by Risk-On Shift
The Australian Dollar (AUD) managed to pick itself up off the floor on Friday as weaker-than-expected US jobs market data lifted the market mood. Tempered rate hike bets from the Federal Reserve improved risk sentiment on hopes of allaying global growth fears.
Meanwhile, the Reserve Bank of Australia (RBA) Statement on Monetary Policy revealed that further tightening could be required.
Turning to today, the ‘Aussie’ will be left to trade on market sentiment amid a lack of economic data.
New Zealand Dollar (NZD) Supported by Upbeat Market Mood
Likewise, the New Zealand Dollar (NZD) found renewed strength at the end of last week, courtesy of the improving market mood.
In addition to fading Fed rate bets, the mood was cheered by news from China revealed that its central bank will increase stimulatory measures to bolster the flagging economy.
Looking ahead, in the absence of any domestic data of note, movement in the ‘Kiwi’ at the start of this week is likely to remain tied to market risk appetite.
Pound (GBP) Undermined by Weakening Economic Growth
The Pound (GBP) was mostly subdued at the end of last week as GBP investors digested Thursday’s dovish hike from the Bank of England (BoE).
Mounting concerns over the fragility of the UK economy also kept a firm lid on Sterling. Downgraded inflation and growth prospects spooked investors as BoE warned that interest rates will remain elevated for some time.
A lack of data today will leave Sterling to trade on market sentiment and ongoing economic jitters.
Euro (EUR) Buoyed by Positive German Data
The Euro (EUR) ticked higher on Friday as EUR investors welcomed an unexpected surge in German factory orders.
Reinforcing the single currency’s gains was its negative correlation with the US Dollar.
Coming up, the focus for EUR investors today will be on Germany’s latest Industrial production figures. Will these also surprise to the upside and help to boost the Euro?
US Dollar (USD) Sours as US Adds Fewer Jobs than Expected
US Dollar (USD) tumbled on Friday as the latest US jobs figures pointed to a cooling labour market. Despite the unemployment rate slipping to 3.5% against an expected unchanged 3.6%, non-farm payrolls added fewer new jobs than predicted.
The latest data indicates that the Federal Reserve’s rate hikes appear to be cooling the red-hot labour market, paring rate hike bets.
Without any further data, the ‘Greenback’ will have to trade on market sentiment as investors digest the latest labour market data and what that could mean for the Fed’s next move.
Canadian Dollar (CAD) Slumps as Unemployment Rises
Canadian Dollar (CAD) nosedived on Friday after Canada reported domestic unemployment rose to an 18-month high in July.
However, preventing further losses was the continued strong recovery of WTI oil prices as it hit close to a four-month high, holding above $82 a barrel.
Looking ahead, oil price dynamics and the close relationship with the US Dollar will be the main drivers for the ‘Loonie’. If the ‘Greenback’ continues to struggle, the Canadian Dollar could remain under pressure.
Data Releases
Aug 7th 16:00 EUR DE – Industrial Production MoM (Jun) -0.4%