Australian dollar (AUD) rises amid risk-on mood
The Australian dollar (AUD) strengthened yesterday as risk appetite returned to markets, thereby boosting the appeal of the risk-sensitive ‘Aussie’.
In addition, a better-than-expected industry index from the Ai Group supported AUD. The index also contained signs of stubborn inflationary pressures, adding to Reserve Bank of Australia (RBA) interest rate hike bets.
This morning, Australia’s latest business confidence index is due out. Could rising morale in July see the ‘Aussie’ climb higher?
New Zealand dollar (NZD) buoyed by upbeat trade
The risk-sensitive New Zealand dollar (NZD) also firmed amid the improvement in the market mood yesterday.
New Zealand’s latest employment data also supported NZD. Jobs growth unexpectedly rebounded in the second quarter, with the unemployment rate rising less than forecast.
Turning to today, could an expected decline in business inflation expectations in the third quarter stoke bets on a Reserve Bank of New Zealand (RBNZ) rate cut and therefore weaken the ‘kiwi’?
Pound (GBP) mixed in absence of data
The pound (GBP) was mixed yesterday amid a lack of data as a recovering market mood saw the increasingly risk-sensitive currency gain ground against some of its safer peers while slipping against riskier rivals.
Meanwhile, recent bets that the Bank of England (BoE) will pursue two more rate cuts by the end of the year kept a firm lid on GBP exchange rates.
UK economic data remains in short supply today, potentially leading to more mixed movement in Sterling.
Euro (EUR) struggles despite positive German data
A larger-than-forecast recovery in German industrial production in June failed to lift the euro (EUR) yesterday.
Despite the upbeat data, a recovering appetite for risk put the safer single currency on the back foot.
With no Eurozone data due to be released today, the euro’s movement may be muted.
US dollar (USD) stumbles as markets stabilise
The US dollar (USD) fell yesterday as markets stabilised following the global selloff earlier in the week. The improving market mood weighed on the safe-haven ‘greenback’.
However, receding bets on an emergency interest rate cut from the Federal Reserve helped to limit USD’s downside.
Looking forward, the focus for USD investors will be the latest US initial jobless claims figure. If new unemployment claims remained at a near one-year high last week, renewed fears over the health of the US economy could hurt the US dollar.
Canadian dollar (CAD) boosted by recovering oil prices
Rising oil prices lifted the crude-linked Canadian dollar (CAD) yesterday, although it still remained lower against AUD and NZD.
Oil price dynamics may drive CAD movement again today amid a lack of Canadian economic data. If oil continues to tick higher, the ‘loonie’ may gain ground.
Data Releases
11:30 AUD NAB Business Confidence (Jul)
12:40 AUD RBA Bullock Speech
13:00 NZD Business Inflation Expectations (Q3)
22:30 USD Initial Jobless Claims (03/Aug)