Australian dollar (AUD) lifted by risk appetite
The Australian dollar (AUD) trended higher through the end of last week, with the ‘Aussie’ able to recoup a good portion of Thursday’s losses.
This upswing in AUD exchange rates was linked to a risk-on market mood, stemming from weakness in the US dollar (USD).
Looking ahead, with domestic data in short supply, the direction of the ‘Aussie’ may continue to be dictated by market risk flows at the start of this week.
New Zealand dollar (NZD) firms despite slump in retail sales
The New Zealand dollar (NZD) rallied on Friday as the risk-on mood was enough to offset some lacklustre domestic retail sales figures.
New Zealand data is also thin on the ground today, likely leaving the ‘kiwi’ at the mercy of market risk appetite.
Pound (GBP) strengthened by BoE rate speculation
The pound (GBP) closed last week’s session on a positive note as Thursday’s impressive UK PMI figures continued to provide tailwinds.
This highlighted the expected divergence between the Bank of England (BoE) and Federal Reserve in September, with the former expected to keep rates on hold while the latter begins cutting.
Meanwhile, the pound may struggle to find direction at the start of this week amid a sparse UK data calendar.
Euro (EUR) dented by risk-on flows
The euro (EUR) slipped on Friday as a prevailing risk-on mood limited the appeal of the safe-haven currency.
However, the single currency’s negative correlation with the US dollar helped ensure the pullback in EUR exchange rates was fairly modest in scope.
In focus for EUR investors at the start of this week will be Germany’s latest IFO business climate survey. Expect to see EUR exchange rates soften if business sentiment continued to deteriorate this month.
US dollar (USD) plunges on dovish Powell remarks
The US dollar nosedived at the end of last week as market’s responded to Federal Reserve Chair Jerome Powell’s keynote speech at the US central bank’s annual Jackson Hole symposium.
USD exchange rates slumped as Powel conceded that inflation is ‘on a sustainable path back to 2%’ and that the ‘time has come’ for the bank to start adjusting monetary policy.
The latest US durable goods orders figures could provide a leg up for the US dollar at the start of this week amid forecast goods orders will have rebounded sharply last month.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) ticked higher on Friday as strengthening oil prices reflected positively on the commodity-linked currency.
In the absence of any notable Canadian economic data, movement in the ‘Loonie’ is likely to remain linked to oil price dynamics today.