Australian Dollar (AUD) holds steady ahead of RBA rates decision
The Australian dollar (AUD) is steady ahead of tomorrow’s Reserve Bank of Australia (RBA) rate decision, where economists expect rates to remain unchanged. However, any hawkish comments made by the board, may provide a boost to ‘the Aussie’.
Market participants are cautious, waiting for Wednesday’s release of the August inflation figures. This report is anticipated to show headline inflation back within the RBA’s target range of 2-3%, which may influence future monetary policy decisions.
A drop in inflation could alleviate pressure on the central bank to keep interest rates on hold at future meetings, potentially limiting AUD gains against its peers.
NZ trade balance for August expected today
The New Zealand dollar (NZD) may see volatility as August’s trade balance figures are released today. A narrowing of the trade deficit is anticipated, which could bolster the kiwi amid rising import costs.
Market participants are keenly watching for the data, as any improvement could indicate stronger economic fundamentals.
The trade balance’s impact on expectations for future interest rate adjustments by the Reserve Bank of New Zealand will also be a key focus for investors.
Pound (GBP) trims gains despite strong retail sales
The pound (GBP) initially strengthened on Friday after the UK’s latest retail sales figure smashed forecasts, printing at 1% rather than the expected 0.4%.
However, some profit-taking saw Sterling quickly trim its gains. In addition, worries about the Labour government’s ‘painful’ budget next month may have dampened GBP demand.
Today, GBP investors will be focused on the latest PMI results. Could a slowdown in UK business activity see Sterling stumble?
Euro (EUR) unclear in absence of data
The euro (EUR) was uncertain on Friday as a lack of Eurozone data left the common currency rudderless.
However, the safer euro was able to eke out some gains against its riskier rivals as the global market mood soured.
The latest Eurozone PMI surveys reveal that private sector activity has hit a three-month low. The factory sector remains in decline, with manufacturing output contracting sharply, which may weigh heavily on the euro.
US dollar (USD) regains some ground as sentiment sours
While the aftermath of the Federal Reserve’s 50bps interest rate cut initially kept the US dollar (USD) subdued on Friday, USD was eventually able to recoup some losses.
The mild recovery came as risk sentiment soured, thereby boosting demand for the safe-haven ‘greenback’. Escalating tensions in the Middle East rattled global markets.
Canadian dollar (CAD) unmoved by upbeat sales data
The Canadian dollar (CAD) was unable to gain ground on Friday, despite stronger-than-expected domestic retail sales. Falling oil prices weighed on the crude-linked ‘loonie’.
Turning to today, Canadian economic data is in short supply. Therefore, oil price dynamics could drive most movement in the Canadian dollar.
Data releases
09:00 EUR Manufacturing PMI (Sep)
09:00 EUR Services PMI (Sep)
09:30 GBP Manufacturing PMI (Sep)
09:30 GBP Services PMI (Sep)
13:00 USD Fed Bostic Speech