Australian dollar (AUD) tumbles amid gloomy mood
The Australian dollar (AUD) extended its downside yesterday, hitting multi-month lows against some peers, as an anxious mood in Chinese markets put heavy pressure on the ‘Aussie’.
This downbeat sentiment continued into the evening, driving the risk-sensitive Australian dollar lower.
Turning to today, the latest inflation figures could see the ‘Aussie’ test new lows. Inflation is forecast to have cooled to its lowest level in over three years in the third quarter, which could fuel Reserve Bank of Australia (RBA) interest rate cut bets.
New Zealand dollar (NZD) declines amid risk-off tone
The New Zealand dollar (NZD) also hit new multi-month lows yesterday as risk aversion dragged on NZD exchange rates.
With New Zealand data in short supply today, the ‘kiwi’ could be dragged down by its positive correlation with the ‘Aussie’.
Pound (GBP) rises ahead of UK budget
The pound (GBP) strengthened yesterday as optimism ahead of tonight’s Autumn Budget boosted the UK currency.
GBP investors are hopeful that Chancellor Rachel Reeves will announce increased public investment. More spending and borrowing could boost the British economy, and potentially slow the pace of interest rate cuts from the Bank of England (BoE).
Reeves will finally unveil the budget tonight, potentially driving significant volatility in the pound. If markets react positively overall, Sterling could gain ground.
Euro (EUR) uncertain despite better-than-expected German data
The euro (EUR) was mixed yesterday, despite Germany’s latest consumer confidence index unexpectedly rising to its highest level since April 2022.
It seemed that EUR investors were reluctant to bet too heavily on the common currency ahead of some potentially damaging economic data today.
The focus ahead for EUR investors will be the Eurozone’s third-quarter GDP figures. If growth in the bloc remains weak, as expected, the euro could slide.
US dollar (USD) fluctuates higher amid risk aversion
The US dollar (USD) was volatile yesterday, with an unexpected decline in US job openings temporarily denting USD.
However, rising US Treasury yields and an increasingly risk-averse market mood saw the safe-haven ‘greenback’ strengthen overall.
US third-quarter GDP is also due out tonight. The American economy is expected to have grown 3% in the three months from July to September, which could see the US dollar surge.
Canadian dollar (CAD) mixed on oil and USD correlations
The Canadian dollar (CAD) traded without a clear direction yesterday. While weakening oil prices weighed on the crude-linked currency, CAD’s positive correlation with USD provided some support.
Looking forward, CAD’s positive correlation with USD could drive movement later tonight. Could strong US GDP see the Canadian dollar climb?
Data releases
10:30 AUD Inflation Rate (Q3)
20:00 EUR GDP Growth Rate (Q3)
22:15 USD ADP Employment Change (Oct)
22:30 USD GDP Growth Rate (Q3)
22:30 GBP Autumn Budget
23:00 EUR German Inflation Rate (Oct)