Australian dollar (AUD) buoyed by RBA minutes
The Australian dollar (AUD) strengthened during yesterday’s session after the Reserve Bank of Australia (RBA) published the minutes from its August policy meeting.
The minutes showed that RBA members believe it is unlikely that interest rates will cut in the ‘short term’, which in addition to a risk-on market mood, helped to propel the ‘Aussie’ higher.
Australian data is thin on the ground today and as a result any movement in AUD is likely to be driven by market risk dynamics.
New Zealand dollar (NZD) firms as exports rise
The New Zealand dollar (NZD) also rallied on Tuesday, with the ‘kiwi’ drawing support from a surprising jump in domestic exports last month in addition to the positive market mood.
The publication of New Zealand’s latest credit card spending figures may drive moment in NZD today, with another drop potentially dragging on the New Zealand dollar.
Pound (GBP) buoyed by UK economic optimism
The pound (GBP) trended broadly higher yesterday, with Sterling sentiment strengthening amid UK economic optimism.
Markets hope that signs of a stronger economy, coupled with the perceived political stability of the new Labour government will help to encourage more investment in the UK.
Coming up, GBP investors may look to the UK’s latest government borrowing figures for direction today, as the state of the UK’s public finances may shape Chancellor Rachel Reeves upcoming budget.
Euro (EUR) pressured by risk-on flows
The euro (EUR) ticked lower on Tuesday as demand for the safe-haven currency was limited by the prevailing risk-on sentiment.
This offset the release of the latest Eurozone consumer price index, which confirmed inflation in the bloc accelerated in July and raised fresh questions over a potential interest rate cut from the European Central Bank (ECB) next month.
Meanwhile, in the absence of any notable Eurozone economic data, the euro may struggle for direction today.
US dollar (USD) extends losses in bullish trade
The US dollar (USD) remained on the defensive through yesterday’s session, leading the currency to slip to new multi-month lows.
The USD selling bias remained firmly entrenched as Federal Reserve rate cut bets and the positive market mood limited the appeal of the safe-haven currency.
Looking ahead, the publication of the minutes from the Fed’s latest policy meeting will be in the spotlight for USD investors today as they look for more insight into how aggressively the US central bank will cut rates in the coming months.
Canadian dollar (CAD) dips as inflation cools
The Canadian dollar (CAD) weakened on Tuesday as a cooling of domestic inflation stoked bets for another interest rate cut from the Bank of Canada (BoC).
With Canadian data in short supply, movement in the ‘loonie’ today may be dictated by oil price dynamics. If oil prices continue to soften CAD exchange rates may come under additional pressure.
Data Releases
21st Aug 13:00 NZD Credit Card Spending (Jul) -3.1%
21st Aug 16:00 GBP Public Sector Borrowing (Jul) -£1.5bn
22nd Aug 04:00 USD FOMC Minutes