Australian Dollar (AUD) strengthens amid risk-on sentiment
The Australian dollar rose yesterday on the back of a lift in commodity prices, and an overall boost in risk sentiment, on optimism about the US and Chinese economies.
Australia’s final budget outcome for 2023/2024, showed a significant underlying cash surplus of A$15.8 billion, surpassing the earlier projection of A$9.3 billion.
Comments from US Fed Chair Powell, however dented the AUD late in the session, where he mentioned that the FOMC is not in a hurry to cut rats and reductions in interest rates would occur over time.
Today Australia will release retail trade and building approval data for August. A slight increase in retail spending is likely, which could cause a lift in the AUD.
New Zealand dollar (NZD) lifted as business sentiment continues to surge
The New Zealand dollar (NZD) rose yesterday, following on from ANZ’s latest monthly business sentiment survey (ANZBO), which delivered an unexpected boost in business confidence, with sentiment climbing to near 10-year highs. This upward trend signals growing optimism within the business community.
Today will see the release of New Zealand’s longest-running business survey, the NZIER Quarterly Survey of Business Opinion (QSBO). A further positive reading could also benefit the ‘Kiwi’.
US dollar (USD) muted ahead of high-impact data
The US dollar (USD) got off to a subdued start this week as USD investors were reluctant to make any aggressive bets in advance of some highly influential US data releases coming up later in the week.
While an upswing in US Treasury yields lent some support to the ‘greenback’ this was largely offset by risk-on flows.
The latest US Job Openings and Turnover survey (JOLTs) will be published later tonight. If August’s data signals that the US labour market continues to cool, it’s likely to stoke Federal Reserve rate cut bets and pull the US dollar lower.
Pound (GBP) gains capped as UK GDP revised down
The pound (GBP) firmed through yesterday’s session as a broadly upbeat market mood reflected positively on the increasingly risk-sensitive currency.
However, these gains remained modest in scope after the UK’s final GDP print for the second quarter saw growth revised lower.
Turning to today’s session, the UK’s latest manufacturing PMI may limit demand for the pound if September’s finalised figures confirm factory activity slowed last month.
Euro (EUR) slips as German inflation cools
The euro (EUR) trended lower on Monday, following the publication of Germany’s latest consumer price index.
September’s preliminary CPI figures reported inflation slowed to just 1.6%, the slowest pace of price growth in over three years, stoking bets for another interest rate cut from the European Central Bank (ECB) later this month.
Looking ahead, the euro could come under notable selling pressure this evening as the CPI figures for the Eurozone as a whole are expected to report inflation in the bloc fell below the ECB’s target for the first time since June 2021.
Canadian dollar (CAD) muted on soft oil prices
The Canadian dollar (CAD) was mostly rangebound on Monday as a modest fall in oil prices limited the appeal of the commodity-linked currency.
Coming up, Canada’s latest manufacturing PMI is forecast to report the country’s factory sector returned to growth last month, potentially helping to underpin the ‘loonie’.
Data Releases
16:00 EUR Manufacturing PMI (Sep)
18:30 GBP Manufacturing PMI (Sep)
19:00 EUR Inflation Rate (Sep)
23:40 CAD Manufacturing PMI (Sep)
24:00 USD ISM Manufacturing PMI (Sep)
24:00 USD JOLTs Job Openings (Aug)