Australian Dollar (AUD) buoyed by upbeat mood
The Australian dollar (AUD) initially rose on Friday thanks to an upbeat market mood.
However, risk appetite faded slightly in the evening, causing AUD to trim its gains against some of its rivals.
Since then, the AUD continues to experience mixed fortunes. While the risk-on sentiment initially provided support, the absence of significant Australian data today has left the currency relatively muted. Investors are now focusing on the upcoming Reserve Bank of Australia (RBA) meeting minutes, which could provide further direction for the AUD.
New Zealand Dollar (NZD) recovers slightly on strong data
The New Zealand dollar (NZD) attracted some much-needed support at the end of last week, with the ‘kiwi’ benefiting from a stronger-than-expected domestic manufacturing PMI.
An unexpectedly strong rise in New Zealand producer prices in the second quarter also lifted NZD, as it seemed to dampen bets on another interest rate cut from the Reserve Bank of New Zealand (RBNZ).
The NZD has maintained its recovery momentum into this week, driven by this strong domestic data. However, the latest services sector index released today showed signs of ongoing weakness, which might weigh on the ‘kiwi’ if the trend continues.
Pound (GBP) trims gains after recovering retail sales
The pound (GBP) strengthened as Friday’s European session started, thanks to a 0.5% recovery in UK retail sales in July.
However, Sterling surrendered most of its gains in the evening as some investors decided to cash in on the currency’s strong recovery from the lows hit earlier in the week.
After last week’s volley of high-impact data, things are set to quieten down for the pound at the start of this week. Sterling could therefore be muted through today’s session.
Euro (EUR) mixed amid lack of data
The euro (EUR) traded without a clear trajectory on Friday as a lack of Eurozone data left the single currency rudderless.
The mostly risk-on market mood added to EUR’s uncertain movement, with the safer euro wobbling in different directions against many of its peers.
Turning to today, Eurozone economic data remains in short supply. As a result, the euro could struggle to find a clear direction once again.
US Dollar (USD) weakens amid improving risk appetite
The safe-haven US dollar (USD) fell on Friday, as a risk-on market mood and declining US Treasury yields both dragged the ‘greenback’ lower.
A larger-than-expected rise in US consumer sentiment published overnight stemmed USD’s losses, although the American currency was unable to recover.
Since then, the dollar has remained under pressure, with traders now considering the possibility of more aggressive rate cuts by the Federal Reserve due to a slightly weaker economic outlook. This shift in expectations may continue to weigh on the USD in the coming sessions.
Canadian Dollar (CAD) slides as oil prices decline
The crude-linked Canadian dollar (CAD) was undermined by falling oil prices on Friday, while the currency’s positive correlation with the US dollar also dampened CAD demand.
The CAD continues to be pressured by declining oil prices, and with Canadian data absent from the calendar today, the currency’s movement will likely be driven by oil prices and the broader trajectory of the USD.
Data Releases
19th Aug 08:30 NZD Services NZ PSI (Jul) 40.9
19th Aug 23:15 USD Fed Waller Speech