Australian dollar (AUD) finds fleeting gains on China rate cut
The Australian dollar (AUD) initially firmed yesterday, following the People’s Bank of China’s (PBoC) announcement of a cut to loan prime rates.
However, the ‘Aussie’ began to retreat by the end of the Asian trading session as market sentiment soured.
Looking ahead, in the absence of any notable domestic data, any movement in the Australian dollar is likely to be linked to market risk appetite.
New Zealand dollar (NZD) knocked by risk-off flows
The New Zealand dollar (NZD) stumbled on Monday as a weakening of market sentiment limited the appeal of the risk-sensitive currency.
Turning to today’s session, will a narrowing of New Zealand’s trade deficit in September provide a boost to the ‘kiwi’ this morning?
US dollar (USD) strengthened by rising US Treasury yields
The US dollar (USD) got off to a positive start this week, with the currency rising in tandem with US Treasury yields.
Reinforcing the upside in the safe-haven ‘greenback’ was the negative shift in market risk appetite through the latter half of Monday’s trading session.
Looking ahead, with US data in short supply the US dollar may be influenced by wider market trends today. Expect to see USD exchange rates strengthen if the mood remains cautious.
Pound (GBP) subdued amid tax hike speculation
The pound (GBP) traded sideways at the start of this week’s session, as GBP investors grew increasingly wary of the UK’s upcoming Autumn Budget.
Markets are particularly concerned by reports that Chancellor Rachel Reeves will unveil several tax hikes on 30 October.
A speech by Bank of England (BoE) Governor Andrew Bailey will be a key focus for GBP investors today. Expect to see the pound come under pressure later tonight if Bailey reiterates that the BoE might cut rates aggressively if inflation remains under control.
Euro (EUR) flat as German PPI sinks
The euro (EUR) was muted on Monday, following the release of Germany’s latest producer price index.
The index reported producer prices retreated at a faster-than-expected pace last month, further weakening German inflation expectations.
Meanwhile, EUR investors will look to a speech by European Central Bank (ECB) President Christine Lagarde for fresh impetus this evening. If she strikes a broadly dovish tone, the single currency is likely to weaken.
Canadian dollar (CAD) muted despite rebound in oil prices
The Canadian dollar (CAD) traded in a narrow range on Monday, with the commodity-linked currency failing to find much purchase despite a rebound in oil prices.
Coming up, the release of Canada’s latest producer price index may drag on the ‘loonie’ later this evening, as another decline in producer inflation is likely to reinforce bets for a bumper interest rate cut from the Bank of Canada (BoC) later in the week.
Data releases
07:45 NZD Balance of Trade (Sep)
16:00 GBP Public Sector Borrowing (Sep)
22:30 CAD PPI (Sep)
23:25 GBP BoE Governor Bailey Speech
00:00 EUR ECB President Lagarde Speech