Australian Dollar (AUD) soars amid risk-positive trade
The Australian Dollar (AUD) surged to multi-month highs yesterday as a risk-on rally in the wake of the Federal Reserve’s interest rate decision turbocharged the ‘Aussie’.
Fed Chair Jerome Powell signalled that the bank was starting to consider rate cuts, boosting optimism around the global economic outlook for 2024.
Turning to today, could an improvement in Australia’s latest PMI results see the ‘Aussie’ tick higher?
New Zealand Dollar (NZD) climbs as market mood improves
The New Zealand Dollar (NZD) also rallied yesterday, with the risk-sensitive ‘Kiwi’ enjoying the cheery market mood.
However, a shock contraction in New Zealand’s third-quarter GDP growth rate capped NZD’s upside.
The ‘Kiwi’ may waver this morning as investors digest the latest manufacturing PMI. Risk appetite could then drive NZD moving forward.
Pound (GBP) rallies amid hawkish BoE rhetoric
The Pound (GBP) strengthened during yesterday’s European session after the Bank of England (BoE) struck a hawkish tone at its final interest rate decision of 2023.
Although the bank left rates unchanged, as expected, policymakers pushed back against speculation of coming rate cuts.
The UK’s preliminary PMI results for December are in the spotlight this evening. Another expansion in service sector activity could see GBP leap higher.
Euro (EUR) buoyed by ECB decision
The European Central Bank (ECB) also delivered its rate decision yesterday. Policymakers did not discuss rate cuts, according to ECB President Christine Lagarde, which boosted the Euro (EUR).
The common currency also benefitted from its strong negative correlation with the US Dollar (USD), as the ‘Greenback’ crumbled.
The Eurozone PMI surveys are also out this evening. Will a continued contraction in business activity see EUR exchange rates slide?
US Dollar (USD) nosedives following dovish Fed comments
The US Dollar collapsed yesterday, hitting multi-month lows, as the Fed’s dovish commentary saw markets price in a rate cut as early as March.
An unexpected recovery in US retail sales in the evening only seemed to add to USD’s losses. The upbeat data cheered markets, piling fresh pressure on the safe-haven ‘Greenback’.
US economic data is in short supply during today’s session. As a result, USD may struggle to recoup its recent losses.
Canadian Dollar (CAD) dragged down by USD correlation
The Canadian Dollar (CAD) fell against its stronger rivals yesterday due to CAD’s positive correlation with USD. However, soaring oil prices may have cushioned the crude-linked currency’s losses.
With Canadian economic data in short supply today, oil price dynamics could drive CAD movement.
Data Releases
Dec 15th 07:30 NZD Business NZ PMI (Nov) 42
Dec 15th 08:00 AUD Manufacturing PMI (Dec) 48.5
Dec 15th 08:00 AUD Services PMI (Dec) 46.5
Dec 15th 19:00 EUR Manufacturing PMI (Dec) 44.6
Dec 15th 19:00 EUR Services PMI (Dec) 49
Dec 15th 19:30 GBP Manufacturing PMI (Dec) 47.5
Dec 15th 19:30 GBP Services PMI (Dec) 51