Australian Dollar (AUD) Unable to Hold Gains
The Australian Dollar (AUD) briefly spiked to multi-month highs yesterday after inflation beat forecasts, prompting bets on another possible interest rate hike from the Reserve Bank of Australia (RBA).
However, the ‘Aussie’ then seemed to suffer some profit-taking, while a souring market mood also dragged the risk-sensitive currency lower.
All eyes are on the RBA’s interest rate decision this afternoon. If the bank leaves the door open to another rate hike in the future, AUD could climb.
New Zealand Dollar (NZD) Stumbles as Sentiment Sours
The New Zealand Dollar (NZD) traded in tandem with the ‘Aussie’ yesterday, initially firming before a risk-off mood sapped demand for the ‘Kiwi’.
Amid an ongoing lack of New Zealand data today, NZD could trade true to its positive correlation with AUD once again.
The RBA decision may spark volatility.
Pound (GBP) Directionless amid Lack of Data
The Pound (GBP) traded without a clear direction yesterday as a lack of UK economic data left the increasingly risk-sensitive currency exposed to the market mood.
This saw GBP stumble against its safer peers as investors grew more downbeat, although it was able to recoup earlier losses against some of its riskier rivals.
This evening, the UK’s final services PMI is due out. If it confirms an expansion in activity – or beats preliminary estimates – then Sterling may gain ground.
Euro (EUR) Subdued following Mixed German Data
The Euro (EUR) was also muted yesterday, with mixed German trade data stifling the currency’s potential.
In addition, a risk-off mood supported the safer currency, but this was offset by EUR’s strong negative correlation with the rallying US Dollar (USD).
Looking ahead, the Eurozone services PMI this evening could impact the Euro if it differs from the preliminary estimate.
US Dollar (USD) Jumps amid Gloomy Trade
The US Dollar strengthened during yesterday’s American session. Risk aversion swept markets, thereby boosting the appeal of the safe-haven ‘Greenback’.
A larger-than-forecast contraction in US factory orders only seemed to further rattle investors, thereby adding to USD’s gains.
US data is in short supply today, meaning risk appetite may continue to drive the US Dollar’s movements.
Canadian Dollar (CAD) Firms on USD Correlation
The Canadian Dollar (CAD) shrugged off earlier losses to climb higher during last night’s trade. The upside came thanks to CAD’s positive correlation with USD.
Today, a lack of Canadian economic data could leave the oil-sensitive ‘Loonie’ to trade on crude prices.
Data Releases
Dec 5th 13:30 AUD RBA Interest Rate Decision 4.35%
Dec 5th 19:00 EUR Services PMI (Nov) 48.2
Dec 5th 19:30 GBP Services PMI (Nov) 50.5