Australian dollar (AUD) buoyed by improved risk appetite
The Australian dollar (AUD) opened the week on a positive note, as the currency benefitted from a rise in market risk appetite.
Further support came from stronger-than-expected domestic inflation data, which helped to ease Reserve Bank of Australia (RBA) interest rate cut expectations.
The RBA will deliver its latest rate decision later this afternoon. No policy changes are expected this month, but the ‘Aussie’ is likely to fall if the bank’s forward guidance suggests that policymakers are beginning to discuss rate cuts.
New Zealand dollar (NZD) underpinned by market optimism
The New Zealand dollar (NZD) also firmed on Monday in response to positive risk flows.
Looking ahead, with domestic data in short supply today, movement in the ‘kiwi’ is likely to remain tied to market risk dynamics.
Pound (GBP) muted as focus turns to BoE
The pound (GBP) traded in a narrow range through yesterday’s session as the dust continued to settle on last week’s budget.
Sterling was also subdued as GBP investors turned their focus to the Bank of England’s (BoE) interest rate decision on Thursday.
Coming up, this evening will see the publication of the UK’s latest services PMI. Could an upwards revision to October’s finalised figures provide a modest lift for the pound?
Euro (EUR) supported by USD weakness
The euro (EUR) trended broadly higher on Monday, with the single currency being underpinned by its strong negative correlation with the US dollar (USD).
Tempering these gains, however, was the release of the Eurozone’s latest manufacturing PMI, which despite being revised slightly higher confirmed the bloc’s factory sector remained in deep contraction last month.
In the absence of any notable Eurozone economic releases, the euro may struggle to find direction during today’s session.
US dollar (USD) slides amid US election jitters
The US dollar got off to a poor start this week, after a poll suggested that Kamala Harris has pulled ahead of Donald Trump in the US presidential election.
A Trump victory is seen as positive for the US dollar as his economic policies are viewed as inflationary, which in turn may encourage the Federal Reserve to keep interest rates higher for longer.
The US dollar is likely to remain sensitive to US political jitters as America goes to the polls today, which may see the currency remain on the defensive as USD investors err on the side of caution.
Canadian dollar (CAD) stable as oil prices rise
The Canadian dollar (CAD) traded sideways on Monday as a strong upswing in oil prices helped to offset the pressures stemming from CAD’s positive correlation with the US dollar.
If oil prices continue to climb, the ‘loonie’ may be able to build on this support during today’s session.
Data releases
13:30 AUD RBA Interest Rate Decision
19:30 GBP Services PMI (Oct)
22:00 USD Presidential Election