Australian dollar (AUD) nosedives amid downbeat trade
The acutely risk-sensitive Australian dollar (AUD) fell sharply yesterday morning as panic gripped global markets.
Investors shrugged off a better-than-forecast Chinese Caixin PMI, as well as a sixth consecutive expansion in the Australian services sector, as fears of a slowing US economy sparked widespread risk aversion.
Coming up, the Reserve Bank of Australia (RBA) is due to deliver its latest interest rate decision this afternoon. Could a hawkish rate hold help AUD stage a modest recovery?
New Zealand dollar (NZD) slides amid risk-off mood
The New Zealand dollar (NZD) traded in a wide range against its peers on Monday amid turbulent trading conditions.
Overall, the ‘kiwi’ retreated in tandem with its ‘Aussie’ counterpart against its safer rivals amid the global market selloff.
A data-light calendar in New Zealand could see NZD left vulnerable to global risk dynamics and RBA guidance throughout today’s session.
Pound (GBP) struggles despite services uptick
The pound (GBP) was also struck by volatility on Monday, with GBP weakening overall despite the release of a better-than-forecast finalised services PMI overnight.
The index pointed to a ninth successive expansion in the vital sector, with new businesses rising the most since May 2023. However, due to GBP’s increasingly risk-sensitive status and lingering headwinds following the Bank of England (BoE) rate cut last week, Sterling struggled.
This morning, a lack of high-impact UK data could pull the British Retail Consortium’s (BRC) latest retail sales gauge into focus. Could rebounding consumer activity in the UK lift the pound?
Euro (EUR) surges on USD correlation
The euro (EUR) leapt higher on Monday night due to its negative correlation with a faltering US dollar (USD).
Investors largely disregarded signs of softening services activity across the Eurozone, leaving the safe-haven single currency to soar against its rivals amid anxious trade.
Coming up, could rebounding German factory orders see EUR extend its winning streak this afternoon?
US dollar (USD) volatile amid economic pessimism
The US dollar struck a seven-month low on Monday night before clawing back losses against some of its rivals amid renewed US recession fears.
Investment banking giant Goldman Sachs increased their estimates for a US recession to 25%, due to a rapidly deteriorating US labour market and concerns that the Federal Reserve has deferred interest rate cuts for too long.
This morning, commentary from Fed policymaker Mary Daly could impact USD exchange rates. Meanwhile, could ongoing market turbulence see USD continue to fluctuate?
Canadian dollar (CAD) pressured by falling oil prices
The crude-linked Canadian dollar (CAD) was volatile on Monday night as oil prices fell to a six-month low amid production concerns in the Middle East.
Elsewhere, CAD’s positive trading correlation with a struggling US dollar applied further pressure to the ‘loonie’.
This evening, Canada’s latest services PMI is due for release. Economists expect the index to strike a three-month low, which could deter investor interest in CAD.
Data Releases
6th Aug 07:00 USD Fed Daly Speech
6th Aug 09:01 GBP BRC Retail Sales Monitor (Jul) 0.3%
6th Aug 14:30 AUD RBA Interest Rate Decision 4.35%
6th Aug 16:00 EUR German Factory Orders (Jun) 0.8%
6th Aug 23:30 CAD Services PMI (Jul) 46.8