Australian dollar (AUD) weakens as business confidence dips
The Australian dollar (AUD) faced headwinds at the start of the week as the release of Australia’s latest business confidence index revealed a sharp decline, eroding market sentiment towards the currency.
Additionally, softening commodity prices further weighed on the ‘Aussie’, limiting its upside potential.
Traders are now looking ahead to upcoming Chinese trade data, which could provide additional direction given China’s significant role in Australia’s export market.
New Zealand dollar (NZD) slides amid risk-off mood
The New Zealand dollar (NZD) also struggled on Monday, with the currency falling victim to the prevailing risk-off market mood.
A weaker-than-expected dairy auction result added to the downward pressure on the ‘Kiwi’, as dairy is one of New Zealand’s major exports.
Looking forward, investors are eyeing New Zealand’s upcoming manufacturing data, which may provide further insight into the state of the country’s economy and drive NZD movement.
US dollar (USD) firms in cautious trade
The US dollar got off to a positive start this week as a risk-averse market mood saw investors favour the safe-haven currency.
Renewed jitters regarding a potential US recession spooked in markets and strengthened USD demand, while an uptick in US Treasury yields also extended support to the US dollar during yesterday’s session
The US dollar may continue to catch bids today if traders remain wary ahead of high-impact macroeconomic releases like the latest US inflation figures later in the week.
Pound (GBP) muted amid lull in data
The pound (GBP) trading without strong directional bias at the start of this week in the continued absence of any UK economic data of note.
This left Sterling exposed to the negative risk sentiment which prevailed through Monday’s session.
Kicking off today’s session was the publication of the UK’s latest jobs report. July’s figures reported a modest increase in unemployment, coupled with a slower pace of wage growth, which has dampened expectations for further interest rate hikes from the Bank of England.
Euro (EUR) pressured by USD strength
The euro (EUR) faltered on Monday as the single currency was undermined by its negative correlation with the US dollar (USD).
EUR investors were also reluctant to make any aggressive bets yesterday as they brace for the European Central Bank’s (ECB) interest rate decision later in the week.
Meanwhile, confirmation that Germany inflation slowed sharply last month is likely to act as a headwind for the euro during today’s session.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) edged higher on Monday as the currency was underpinned by a rebound in oil prices.
Looking ahead, oil prices may continue to appreciate as a hurricane threatens to disrupt crude production along the US Gulf Coast, likely lifting the ‘loonie’ in the process.