Australian dollar (AUD) slumps amid rising tensions in the Middle East
The Australian dollar (AUD) fell yesterday after tensions increased in the Middle East, raising concerns that this will turn into a much broader conflict. Risk assets including the ‘Aussie’ are suffering as the market moves to a risk-off mood.
Australia’s trade surplus saw a slight increase yesterday to $A5.64 billion, which had little effect on the falling AUD.
Looking ahead, data on household spending and home lending are due for release today. Meanwhile, Chinese financial markets remain closed for the Golden Week holiday, and the US nonfarm payrolls report is also expected to cause some volatility.
New Zealand (NZD) job numbers expected to decline further
The New Zealand dollar (NZD) also fell yesterday, due to the rising geopolitical tensions in the Middle East. The risk-sensitive ‘Kiwi’ will continue to suffer if the Iran-Israel tension escalates further.
Today’s key release in New Zealand is the August filled jobs report. Recent weekly paid jobs data signals continued declines, reflecting the negative sentiment in job advertising and the softening trend in vacancies.
The outlook remains bleak as these figures align with broader concerns about the weakening labour market. Any further weakening in the labour market may pull the NZD lower.
US dollar (USD) rallies as Fed rate cut bets recede
The US dollar (USD) enjoyed support yesterday as a risk-off market mood and dwindling bets on another 50bps cut from the Federal Reserve boosted USD’s appeal.
A far better-than-forecast ISM services PMI for September kept the ‘greenback’ afloat in the afternoon, with the US services sector unexpectedly seeing its strongest growth since February 2023.
Today, the latest non-farm payrolls report takes centre stage. Could a surprisingly robust reading see USD soar?
Pound (GBP) collapses following BoE Bailey comments
The pound (GBP) plunged on Thursday as markets responded to recent comments from Bank of England (BoE) Governor Andrew Bailey.
In an interview with the Guardian, Bailey said the BoE could become a ‘bit more aggressive’ in reducing interest rates. This saw Sterling slump by over 1% against some rivals.
Turning to today, BoE Chief Economist Huw Pill is due to speak this evening. Could any more comments on policy drive further volatility in the pound?
Euro (EUR) climbs as Eurozone data beats forecasts
The euro (EUR) recovered some of its recent losses yesterday thanks to stronger-than-expected Eurozone economic data.
The bloc’s final services PMI for September was revised higher, coming in at 51.4 rather than 50.5. Meanwhile, Eurozone producer prices grew 0.6% in August, beating forecasts of 0.3% growth and slightly dampening European Central Bank (ECB) rate cut bets.
Later this evening ECB Vice-President Luis de Guindos will deliver a speech. If he once again highlights the downside risks to the Eurozone economy then EUR could stumble.
Canadian dollar (CAD) rises alongside oil
The crude-linked Canadian dollar (CAD) firmed yesterday as rising oil prices continued to boost demand for the currency.
In the absence of any Canadian data today, crude prices could drive CAD movement once again. If oil extends its upside, so could CAD.
Data releases
17:55 GBP BoE Pill Speech
18:00 EUR ECB Guindos Speech
22:30 USD Non Farm Payrolls (Sep)
23:00 USD Fed Williams Speech