Australian dollar (AUD) slips as risk appetite weakens
The Australian dollar (AUD) initially firmed on Friday, underpinned by expectations that the Reserve Bank of Australia is unlikely to cut rates at its September meeting.
However, the ‘Aussie’ lost this momentum through the European session as investor sentiment soured and demand for risk assets softened.
Looking ahead, the Australian dollar’s performance at the start of this week is likely to hinge on the latest Chinese economic indicators. An improvement in industrial production and retail sales may help to underpin the ‘Aussie’ today.
New Zealand dollar (NZD) slides as factory sector contracts
The New Zealand dollar (NZD) was pressured by both the deterioration in risk sentiment as well as a shock contraction in New Zealand’s latest manufacturing PMI at the end of last week.
The ‘kiwi’ may remain under pressure today as data is expected to show that New Zealand’s service sector also contracted in August.
Pound (GBP) falters as UK GDP stalls
The pound (GBP) closed last week on a sour note as the UK’s latest GDP figures reported the UK economy stalled in July.
The stagnation of growth at the start of the third quarter dragged on Sterling, making it even more difficult for Rachel Reeves to close the gap in public finances without resorting to substantial tax hikes in her autumn budget.
Looking ahead, in a week packed with high-impact UK economic releases and the Bank of England’s (BoE) latest interest rate decision, GBP investors may be wary of making any aggressive bets.
Euro (EUR) subdued amid European security concerns
The euro (EUR) was muted on Friday amid fresh concern over European security, following the incursion by Russian drones into Poland earlier in the week.
This comes as Poland refuted suggestions that the incursions may have been a mistake, while the Kremlin claimed any peace talks with Ukraine are on ‘pause’ as the EU launched new sanctions on Russia.
In the absence of any Eurozone data of note, movement in the euro is likely to be linked to wider market trends at the start of this week.
US dollar (USD) gains capped by weakening morale
The US dollar (USD) trended broadly higher at the end of last week, with the safe-haven currency attracting skittish investors.
However, these gains were trimmed as the week’s session came to a close, as the University of Michigan’s US consumer sentiment index reported that household morale deteriorated more than expected this month.
Turning to the start of this week, movement in the US dollar may be limited ahead of the Federal Reserve’s highly anticipated interest rate decision on Wednesday.
Canadian dollar (CAD) supported by rising oil prices
The Canadian dollar (CAD) was steady on Friday, with the commodity-linked currency being underpinned by a rise in oil prices as the EU moved to block Russian energy imports.
The ‘loonie’ is likely to remain sensitive to oil price movement at the start of this week, potentially buoying CAD exchange rates if crude prices continue to climb.
Data Releases
08:30 NZD Services PMI (Aug)
22:30 USD Empire State Manufacturing Index (Sep)