Australian dollar (AUD) slips in risk-off mood
The Australian dollar (AUD) slipped yesterday as tensions in the Middle East continued to escalate. Strong employment figures out of the US on Friday evening also continued to hamper the ‘Aussie’, as traders toned down bets for further large interest rate cuts out of the US.
This morning, all eyes will be on the minutes from the September RBA Board meeting, as they could provide insight into the future direction of interest rates.
Additionally, Australia will see the release of key business and consumer confidence surveys, along with job advertisements data.
New Zealand dollar (NZD) slumps in cautious trade
The New Zealand dollar (NZD) faltered yesterday as a downbeat mood limited the appeal of the risk-sensitive currency.
With no major data out of New Zealand today, the main focus this week turns to the all-important RBNZ meeting on Wednesday, with a rate cut widely anticipated. The key question now is not whether a cut will happen, but how significant it will be.
Economists are split on whether the RBNZ will cut interest rates 25bp or 50bp, with volatility expected in the ‘Kiwi’ no matter the outcome.
US dollar (USD) strengthens on reduced Fed rate cut speculation
The US dollar (USD) trended broadly higher on Monday as USD investors trimmed their bets for another bumper rate cut from the Federal Reserve next month.
Bets for another 50bps interest rate cut have now been almost completely erased in the wake of Friday’s stronger-than-expected payroll figures.
US data is in short supply today, potentially leading movement in the US dollar to be dictated by market risk dynamics. If events in the Middle East leave investors on edge, we may see USD demand strengthen.
Pound (GBP) slips amid rising BoE rate cut expectations
The pound (GBP) got off to a poor start this week, amid growing bets the Bank of England (BoE) will cut interest rates at a faster pace than previously thought.
Following some particularly dovish comments from BoE Governor Andrew Bailey last week, some analysts suggest that there is support within the bank for consecutive rate cuts in November and December.
In lieu of any impactful UK economic releases, the pound may remain on the defensive today as GBP investors continue to reprice their BoE rate cut expectations.
Euro (EUR) fluctuates on mixed data
Trade in the euro (EUR) was mixed on Monday, following the publication of some uneven EUR data releases.
EUR sentiment was initially dented by a much larger-than-expected contraction in German factory orders, before finding relief from a rebound in Eurozone retail sales.
Today will see the release of Germany’s latest industrial production figures, where a rebound in factory output could lend some support to the euro.
Canadian dollar (CAD) supported by rising oil prices
The commodity-linked Canadian dollar (CAD) was underpinned on Monday by a continued acceleration in oil prices amid concerns over potential supply disruptions in the Middle East.
Looking ahead, the ‘loonie’ may strengthen today if oil prices continue to march higher.
Data Releases
16:00 EUR German Industrial Production (Aug)
17:00 EUR ECB Schnabel Speech