Australian dollar (AUD) slips following RBA remarks
The Australian dollar (AUD) depreciated yesterday, despite a risk-on market mood, amid comments from Reserve Bank of Australia (RBA) Chief Economist and Assistant Governor Sarah Hunter.
Although Hunter said the bank was ‘close to getting inflation to target’, she also brushed off July’s jump in inflation as being impacted by the timing of rebates.
Australia’s leading economic index is expected to show a modest improvement in August, which may provide AUD with some support. Elsewhere, risk appetite will likely affect the ‘Aussie’.
New Zealand dollar (NZD) weakens in tandem with AUD
The New Zealand dollar (NZD) also softened yesterday in spite of the upbeat mood as NZD’s positive correlation with AUD dragged the currency down.
With market-moving New Zealand data absent from the calendar today, global risk dynamics will likely drive most movement in NZD.
Pound (GBP) unsure following UK jobs report
The pound (GBP) was mixed yesterday, although it managed to rise against its weaker peers, as GBP investors responded to the latest UK labour market overview.
The data showed a slight slowdown in the British jobs market, but this wasn’t enough to impact expectations for an interest rate hold from the Bank of England (BoE) on Thursday.
Turning to today, the UK’s latest consumer price index could keep the pound supported ahead of tomorrow’s BoE decision. Any surprises could spark more notable movement.
Euro (EUR) buoyed by positive German data
The euro (EUR) strengthened yesterday following an unexpected improvement in Germany’s ZEW economic sentiment index.
The common currency also benefitted from weakness in the US dollar (USD), with which the euro is negatively correlated.
European Central Bank (ECB) President Christine Lagarde is due to speak today. Any hawkish remarks could underpin EUR exchange rates.
US dollar (USD) plunges amid Fed independence concerns
The US dollar slumped to multi-month lows yesterday, and a four-year low against the euro, as Stephen Miran was narrowly cleared by the US Senate to join the Federal Reserve’s board of governors in time for this week’s vote.
Miran is an ally of President Donald Trump, who has pressured the Fed to slash interest rates. The prospect of rapid rate cuts paired with concerns about the Fed’s independence weighed heavily on USD.
The ‘greenback’ may be muted today as USD investors brace for tomorrow’s Federal Reserve interest rate decision, where an expected rate cut could drag the American dollar lower.
Canadian dollar (CAD) uncertain amid mixed factors
The crude-linked Canadian dollar (CAD) was mixed yesterday. While a modest uptick in inflation and oil prices supported the ‘loonie’, CAD’s positive correlation with USD saw it slip against stronger rivals.
The Bank of Canada (BoC) is widely expected to cut interest rates at its policy meeting today, which could see CAD slip later in the session.
Data releases
11:00 AUD Westpac Leading Index (Aug)
16:00 GBP Inflation Rate (Aug)
17:30 EUR ECB President Lagarde Speech
23:45 CAD BoC Interest Rate Decision