Australian dollar (AUD) softens as risk appetite falters
The Australian dollar (AUD) saw a decline amid a pullback in risk appetite, despite a lack of notable domestic data. Investors are shifting focus to tomorrow’s release of preliminary retail sales figures.
The AUD is also sensitive to developments in China, its largest trading partner, where economic uncertainty continues to weigh on the currency’s performance.
New Zealand dollar (NZD) steady ahead of RBNZ Governor’s speech
The New Zealand dollar (NZD) held relatively steady with limited domestic data to drive volatility.
However, the upcoming speech by the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr later this week could provide direction for the kiwi.
Investors will be looking for clues regarding the central bank’s future monetary policy, especially given the recent resilience in inflation.
US dollar (USD) falls ahead of Fed decision
The safe-haven US dollar (USD) weakened yesterday as a risk-on sentiment dominated markets ahead of the Federal Reserve’s anticipated rate cut.
In the evening, the Fed followed through with a significant 50bps interest rate cut. While the US dollar initially dropped, it managed to recover some losses following the decision, as the size of the rate cut met market expectations, leading to some stabilisation.
Looking ahead, the US initial jobless claims report this afternoon could influence the USD. If jobless claims remained elevated, it could signal a weakening labor market, potentially putting further pressure on the ‘greenback.’
Pound (GBP) climbs as UK CPI beats forecasts
The pound (GBP) strengthened yesterday after the UK’s latest consumer price index exceeded expectations, cementing bets that the Bank of England (BoE) will leave interest rates unchanged at today’s meeting.
While headline inflation held steady in August, the core inflation rate leapt from 3.3% to 3.6% – above forecasts of 3.5% – revealing that price pressures remain persistent in the UK.
Today, the BoE decision is in the spotlight for GBP investors. With the bank unlikely to adjust its monetary policy, the focus will be on the bank’s forward guidance and whether policymakers are concerned about the persistence of inflation.
Euro (EUR) stumbles amid risk-on mood
The euro (EUR) was subdued yesterday, as a lack of impactful Eurozone data left the single currency struggling to attract bids.
In addition, a broadly upbeat market mood saw the safer euro soften against its riskier rivals.
Turning to today, a speech from European Central Bank (ECB) policymaker Isabel Schnabel is the only Eurozone event of note. Could dovish comments dent the euro?
Canadian dollar (CAD) dented by falling oil prices
The crude-sensitive Canadian dollar (CAD) failed to attract support yesterday, with CAD slipping against its stronger rivals, amid falling oil prices and a weakening US dollar.
With Canadian economic data absent from the calendar today, the ‘loonie’ could once again be driven by oil price dynamics.
Data Releases
8:00 PM AEST – EUR ECB Schnabel Speech
9:00 PM AEST – GBP BoE Interest Rate Decision
12:30 AM AEST (20/9) – USD Initial Jobless Claims (14/Sep)