Australian Dollar (AUD) Weakens as Risk Sentiment Sours
The Australian Dollar (AUD) fell yesterday as a souring market mood weighed heavily on the risk-sensitive currency.
Recent fears about China’s struggling economy were compounded by expectations that the Federal Reserve could continue its aggressive policy tightening cycle.
With no more data out today, market sentiment could continue to be the biggest driver for the ‘Aussie’. If the mood sours further, AUD could slide.
New Zealand Dollar (NZD) Slumps on Global Growth Fears
Meanwhile, the New Zealand Dollar (NZD) fell in tandem with the ‘Aussie’ amid slowing economic activity across the world’s major economies.
Revived interest rate hike bets from the Fed further fanned the flames of risk aversion and dragged the risk-sensitive ‘Kiwi’ down.
Looking ahead, without any major data to close out the week, risk appetite could determine NZD’s direction. Could an ongoing downbeat mood dent the ‘Kiwi’?
Pound (GBP) Sinks amid Rising Recession Worries
The Pound (GBP) continued its descent yesterday amid mounting concerns over the UK economy.
Following on from Wednesday’s dire PMI results, new data from the Confederation of British Industry (CBI) showed that UK retail trade contracted at its fastest pace in over two years this month.
Turning to today, market-moving UK data is thin on the ground. As a result, Sterling may end the week lacking support.
US Dollar (USD) Soars on a Tight Labour Market
The US Dollar (USD) recovered strongly yesterday, surging higher as hawkish Fed comments and lower-than-expected initial jobless claims boosted the currency.
A surprise drop in unemployment benefit claims fuelled further rate hike bets from the Fed, as former Fed official James Bullard called for extra vigilance on persistent inflationary risks.
Looking forward, the Jackson Hole Symposium continues in Wyoming. Fed Chair Jerome Powell is due to speak just after midnight, with his comments potentially driving notable volatility in the currency markets.
Euro (EUR) Wavers amid Mixed Trading Factors
The Euro (EUR) struggled to find a clear direction yesterday as a lack of data left EUR exposed to mixed factors.
A risk-off mood supported the safer Euro against its riskier rivals, but the currency also suffered from its negative correlation with a recovering US Dollar.
Turning to this evening, the latest German business climate indicator is predicted to fall for a fourth straight month. Mounting headwinds for Europe’s largest economy could weigh on EUR.
Canadian Dollar (CAD) Undermined by Volatile Oil Prices
The Canadian Dollar (CAD) traded as erratically as WTI crude prices on Thursday, as worries about global growth kept oil firmly under $80 a barrel.
Without any further data today, the commodity-linked ‘Loonie’ could continue to trade on oil price dynamics.
Data Releases
Aug 25th 16:00 EUR DE GDP Growth Rate QoQ (Q2) 0%
Aug 25th 18:00 EUR DE Ifo Business Climate (Aug) 86.7
Aug 26th 00:05 USD Fed Chair Powell Speech