Australian dollar (AUD) falls as retail sales slow
The Australian dollar (AUD) fell against most of its rivals yesterday, with a sharper-than-forecast slowdown in Australian retail sales triggering the initial decline.
Risk aversion then swept markets in the evening, putting more pressure on the ‘Aussie’.
Looking ahead, Australian PPI for the third quarter is forecast to show easing producer price growth. Could this weigh on AUD by fuelling Reserve Bank of Australia (RBA) interest rate cut speculation?
New Zealand dollar (NZD) weakens despite improving business confidence
The New Zealand dollar (NZD) initially edged higher yesterday thanks to a surprise rise in New Zealand business confidence in October.
However, the risk-sensitive ‘kiwi’ quickly succumbed to a gloomy market mood.
Impactful New Zealand data is absent from the calendar today. As a result, NZD may face muted movement.
Pound (GBP) slumps as budget anxiety grips UK markets
The pound (GBP) suffered a bruising session yesterday as market anxiety in the wake of the Autumn Budget began to take its toll on the currency.
UK gilts faced a sharp selloff as worries about rising borrowing spooked investors. This was exacerbated by hotter inflation figures from the Eurozone and the US.
Sterling could have a quieter end to the week as the volatility of the budget wears off. However, concerns about higher borrowing costs could keep GBP on the back foot.
Euro (EUR) soars following strong CPI
The euro (EUR) leapt higher yesterday after the Eurozone’s consumer price index exceeded expectations.
Headline inflation in the bloc accelerated from 1.7% to 2% in October, above forecasts of 1.9%. Following on from Wednesday’s stronger GDP figures, this hot CPI catapulted EUR higher.
Turning to today, the euro may struggle to find a clear direction in the absence of any new data, although the strong GDP and CPI figures may keep EUR underpinned.
US dollar (USD) firms amid signs of sticky inflation
The US dollar (USD) rose against its weaker rivals yesterday after the core PCE price index – the Federal Reserve’s preferred measure of inflation – unexpectedly held at 2.7% in September rather than easing to 2.6%, as was forecast.
However, USD’s gains were capped as Wednesday’s surprise slowdown in third-quarter GDP kept a lid on the ‘greenback’.
More high-impact US data is due out tonight, with October’s non-farm payrolls report forecast to show a sharp slowdown in hiring. This could dent the US dollar, although USD will likely surge if payrolls exceed expectations, as they did in September.
Canadian dollar (CAD) mixed amid muted oil prices
The crude-linked Canadian dollar (CAD) was mixed yesterday, rising against its weaker peers but struggling elsewhere, amid a lack of data and muted oil prices.
Today, CAD’s fortunes may be tied to oil prices and the currency’s positive correlation with the US dollar amid an ongoing lack of Canadian data.
Data releases
10:30 AUD PPI (Q3)
22:30 USD Non Farm Payrolls (Oct)
00:00 USD ISM Manufacturing PMI (Oct)