Australian dollar (AUD) rises in risk-positive trade
The Australian dollar (AUD) rose yesterday, touching multi-week highs against some currencies, as a risk-on market mood boosted AUD.
The currency was also supported by hopes that China may ramp up its economic stimulus measures, after the country’s latest consumer price index showed 0.4% deflation in August.
Looking ahead, with Australian consumer inflation expectations forecast to remain high in September, a further reduction in Reserve Bank of Australia (RBA) interest rate cut bets could underpin the ‘Aussie’.
New Zealand dollar (NZD) climbs amid upbeat mood
The New Zealand dollar (NZD) also strengthened yesterday as the cheery tone in markets boosted demand for the high-yielding currency.
New Zealand data is thin on the ground today. Therefore, risk appetite could again drive most movement in the ‘kiwi’ dollar.
Pound (GBP) uncertain in absence of data
The pound (GBP) moved without a clear directional bias yesterday amid an ongoing lack of UK economic releases.
This left the increasingly risk-sensitive currency to trade on market risk dynamics, with Sterling attracting support against some peers while losing ground elsewhere.
Sterling may trade without a clear trajectory once again today, as British economic data remains thin ahead of tomorrow’s GDP release.
Euro (EUR) remains pressured by French politics
The euro (EUR) continued to weaken yesterday amid the political uncertainty in France, following the resignation of French Prime Minister François Bayrou on Tuesday.
A risk-on market mood also placed pressure on the safer single currency, seeing it lose out to its riskier rivals.
Today the spotlight falls on the European Central Bank’s (ECB) interest rate decision. If ECB President Christine Lagarde suggests that the recent rate-cutting cycle has come to an end, EUR could strengthen.
US dollar (USD) stumbles as producer prices fall
The US dollar (USD) weakened yesterday as a broadly risk-on market mood dampened demand for the safe-haven currency.
A shock decline in producer price inflation also weighed on USD, although the ‘greenback’ was able to avoid steeper losses as hesitation ahead of today’s consumer price index muted movement.
For USD investors, the CPI takes centre stage today. With American inflation expected to have ticked higher last month, the ‘greenback’ could climb as traders trim bets on Federal Reserve rate cuts.
Canadian dollar (CAD) softens despite uptick in oil
The crude-linked Canadian dollar (CAD) traded with modest losses against many of its peers yesterday, with a small rise in oil prices failing to offset CAD’s positive correlation with USD.
With Canadian economic data still in short supply today, CAD could continue taking its cues from USD and oil price movements.
Data releases
11:00 AUD Consumer Inflation Expectations (Sep)
22:15 EUR ECB Interest Rate Decision
22:30 USD Inflation Rate (Aug)