Australian dollar (AUD) awaits key economic data and Powell’s Speech
The Australian dollar strengthened on Friday after China lowered interest rates and injected fresh liquidity into the banking system, helping stimulate its slowing economy.
Today’s focus will turn to the release of the latest Chinese PMI’s, a leading indicator of economic health. China’s economic health significantly impacts the Australian economy, so any unexpected decline could hurt the AUD.
Private sector credit data will also be released, which could provide insights into economic activity and borrowing trends.
New Zealand dollar (NZD) Business Outlook could retrace august gains
The New Zealand dollar strengthened slightly on Friday, following on from improvement in Consumer Confidence figures, rising to 95.1 in September, from 92.2 prior.
The September ANZ NZ Business Outlook report is set for release today. Markets are anticipating a potential pullback following the large gains in activity, employment, and investment seen in August.
Looking ahead, the NZ Q3 QSBO Report is expected to show some improvement from the weak Q2 sentiment and domestic trading activity, potentially adding some strength to the ‘Kiwi’.
US dollar (USD) slips as inflation cools
The US dollar (USD) fell on Friday as the latest US inflation data showed that price pressures cooled in August.
The latest PCE price index reported headline inflation slowed to 2.2% last month. This was the slowest pace of price growth since February 2021 and was seen as bolstering the odds of another 50bps interest rate cut from the Federal Reserve in November.
Looking forward, Fed Chair Jerome Powell is due to speak this evening. Could hints of another half-point cut pile fresh pressure on USD?
Pound (GBP) muted amid UK Budget concerns
The pound (GBP) was subdued on Friday amid anxiety ahead of the UK’s Autumn Budget at the end of October.
Chancellor Rachel Reeves is reportedly reconsidering the removal of non-dom tax status due to fears it will not raise any revenue, meaning Labour may look to borrow more or raise taxes elsewhere.
Euro (EUR) pressured as French and Spanish inflation fall
The euro (EUR) also struggled at the end of last week as both French and Spanish inflation cooled more than forecast in September.
The preliminary figures showed that price pressures continue to ease in two of the Eurozone’s largest economies, boosting bets on another European Central Bank (ECB) interest rate cut in October.
Coming up, Germany’s preliminary inflation rate is due out tonight. If German inflation also eased this month, ECB rate cut bets could weigh heavily on the euro.
Canadian dollar (CAD) undermined by USD correlation
Rising oil prices helped the crude-linked Canadian dollar (CAD) at the start of Friday’s session, only for CAD to tumble later due to its positive correlation with USD.
Canadian economic data is absent from the calendar today. Therefore, oil prices and USD movement could influence the ‘loonie’ again.
Data releases
16:00 GBP GDP Growth Rate (Q2)
22:00 EUR German Inflation Rate (Sep)
22:55 USD Fed Chair Powell Speech
23:00 EUR ECB President Lagarde Speech