Australian dollar (AUD) lifted by cooling inflation expectations
The Australian dollar (AUD) regained some ground on Friday, as a decline in producer prices out of the US, confirmed that inflation is easing, supporting expectations for further rate cuts by the Federal Reserve.
Saturday’s briefing from China’s Ministry of Finance fell short of providing the substantial new fiscal stimulus that the market had been anticipating, so the AUD may come under pressure in the days ahead.
Looking ahead, with no major data releases out of Australia today, investors will now look toward Thursday’s employment data. While employment growth has been robust over the past three months, the rising participation rate and population growth are still keeping upward pressure on the unemployment rate.
New Zealand dollar (NZD) stronger amid choppy trade
The New Zealand dollar (NZD) closed higher to end the week, thanks to cooling inflation figures released out of the US.
Today’s focus for the “Kiwi’ will be September’s card spending figures. While a modest increase is anticipated, recent income tax cuts may offer only a marginal lift to spending.
Looking ahead, NZD investors will turn their attention to all-important CPI data out on Wednesday for further direction.
US dollar (USD) dented by fall in consumer sentiment
The US dollar (USD) closed last week’s session on a sour note, following an unexpected deterioration in the University of Michigan’s latest US consumer sentiment index.
USD demand was also dented by US producer price index figures, which beat forecasts but still reported producer price growth continued to cool last month.
Looking ahead, USD investors are likely to look to speeches by Federal Reserve policymakers Christopher Waller and Neel Kashkari for fresh impetus today. If they signal they expect the bank to cut interest rates again next month, the US dollar is likely to weaken.
Pound (GBP) buoyed by rebound in UK GDP
The pound (GBP) edged higher at the end of last week, as GBP investors welcomed the release of the UK’s latest GDP figures.
These showed that the UK economy expanded in August for the first time since May, relieving fears that the stellar growth seen at the start of the year had completely evaporated.
Coming up, Bank of England (BoE) official Swati Dhingra will speak later this morning. As one of the more dovish members of the BoE’s Monetary Policy Committee her comments could act as a headwind for the pound today.
Euro (EUR) subdued amid Eurozone recession fears
The euro (EUR) found itself on the defensive on Friday amid growing uncertainty over the trajectory of the Eurozone economy.
EUR investors are increasingly concerned that the bloc is on the edge of a recession amid a widespread slump in consumer activity.
Turning to this week, the euro may trade sideways through the start of the session as EUR investors brace for the European Central Bank’s (ECB) latest interest rate decision.
Canadian dollar (CAD) muted despite upbeat jobs data
The Canadian dollar (CAD) was left to trade in a narrow range on Friday, with the ‘loonie’ struggling to attract support despite Canada’s latest job data reporting a surprise fall in unemployment last month.
Looking ahead, CAD exchange rates may struggle at the start of this week if global oil prices continue to fall.