Australian Dollar (AUD) Fluctuates amid Volatile Market Mood
The Australian Dollar (AUD) traded erratically against its peers yesterday amid a volatile market mood.
China’s manufacturing PMI beat forecasts, bringing cautious optimism to markets. However, the score remained in contraction territory, limiting AUD’s upside potential.
Looking ahead, Australia’s final manufacturing PMI could dent the ‘Aussie’ if the preliminary reading proves accurate. A sixth month of contracting factory activity could weigh on the Australian Dollar.
New Zealand Dollar (NZD) Wobbles following Mixed Business Confidence
The New Zealand Dollar (NZD) also traded without a clear direction yesterday amid a turbulent risk sentiment and mixed economic data.
New Zealand business confidence improved to its highest level since June 2021, with morale improving as inflationary pressures ease. However, the reading was still negative and printed below expectations.
Without any major data today, the risk-sensitive ‘Kiwi’ could remain exposed to shifts in market sentiment.
Pound (GBP) Undermined by Mounting Economic Gloom
The Pound (GBP) struggled to attract support yesterday as an ambiguous speech from Bank of England (BoE) Chief Economist Huw Pull left GBP investors unimpressed.
Meanwhile, worries that relentless policy tightening could tip the UK into a recession dented Sterling.
Tonight we could see a confirmation of a steep contraction in UK factory activity in August, which may weigh on GBP exchange rates.
US Dollar (USD) Recoups Losses on Fresh Fed Bets
The US Dollar (USD) found some modest support yesterday as the Federal Reserve’s preferred gauge of inflation increased in the year to July. Core PCE inflation rose to 4.2% from 4.1%, proving inflationary pressures are not yet under control.
Elsewhere, initial jobless claims declined further than expected to 228,000, hinting at a labour market that remains stubbornly tight. This lifted Fed rate hike bets, helping USD regain lost ground.
However, today could bring an expected slowdown in non-farm payrolls. Any indication of slack in the US jobs market could put heavy pressure on USD.
Euro (EUR) Slumps despite Stubborn Inflation
The Euro (EUR) came under pressure yesterday despite inflation printing hotter than expected. Headline inflation held steady at 5.3% instead of easing to 5.1%, as expected.
However, with a resurgent US Dollar, the negative correlation the Euro shares with the ‘Greenback’ dented the single currency.
This evening, Eurozone manufacturing PMI data could drag the Euro lower. If the final reading confirms that factory activity in the bloc continued to contract in August, EUR may weaken.
Canadian Dollar (CAD) Boosted by Rebounding Oil Prices
The commodity-linked Canadian Dollar (CAD) found renewed support yesterday. WTI crude oil prices managed to bounce back and climb over $1 on the day, boosting CAD’s appeal.
Turning to this evening, quarterly GDP data could influence the ‘Loonie’. A predicted slowdown in economic growth could weigh on the Canadian Dollar.
Data Releases
1st Sep 09:00 AUD Manufacturing PMI Final (Aug) 49.4
1st Sep 17:55 EUR EA Manufacturing PMI Final (Aug) 43.7
1st Sep 18:30 GBP Manufacturing PMI Final (Aug) 42.5
1st Sep 22:30 CAD GDP Growth Rate (Q2) 0.3%
1st Sep 22:30 USD Non-Farm Payrolls (Aug) 170,000
1st Sep 22:30 USD Unemployment Rate (Aug) 3.5%
2nd Sep 00:00 USD ISM Manufacturing PMI (Aug) 47