Australian dollar (AUD) firms as inflation beats forecasts
The Australian dollar (AUD) surged yesterday after new data showed a larger-than-forecast acceleration in inflation last month.
The latest figures showed price growth rising from 2.8% to 3% in August, above the expected 2.9%, thereby dampening bets on more interest rate cuts from the Reserve Bank of Australia (RBA).
Today, domestic data is thin on the ground. As a result, market risk appetite could drive movement in the ‘Aussie’.
New Zealand dollar (NZD) supported by rising AUD
The New Zealand dollar (NZD) enjoyed a modest upside yesterday thanks to its positive correlation with AUD, although the ‘kiwi’ struggled to hold its gains in the evening.
New Zealand data is also absent from the calendar today, likely leaving NZD at the mercy of wider market trends.
Pound (GBP) weakens amid gloomy economic outlook
The pound (GBP) fell yesterday as a lack of UK data left GBP investors to focus on dour domestic headlines.
News stories about the tough business environment in the UK, including weaker job creation and scrapped investment plans, put pressure on the pound.
The Confederation of British Industry’s (CBI) latest distributive trades survey is expected to show an improvement in September, potentially providing the pound with modest support today.
Euro (EUR) slides as German data disappoints
The euro (EUR) found itself under pressure yesterday after Germany’s business climate index unexpectedly deteriorated to a four-month low in September.
In addition, EUR investors were unnerved by growing animosity between NATO and Russia, as the Kremlin said there is ‘no alternative’ than to continue its offensive in Ukraine following the recent escalation in tensions.
Turning to today, Germany’s latest consumer confidence index is expected to show a marginal improvement heading into October, which could buoy EUR. However, another miss would likely drag the euro lower.
US dollar (USD) firms amid mixed Fed commentary
The US dollar (USD) marched higher on Wednesday as mixed comments from Federal Reserve officials, including a warning on persistent inflation from Fed Chair Jerome Powell, pointed to a cautious approach to rate cuts.
In addition, the safe-haven ‘greenback’ benefitted from a souring market mood as Russia-NATO tensions ratcheted up.
Looking ahead, mixed US data could see USD waver today. Another contraction in durable goods orders and a rise in initial jobless claims could weigh on the US dollar, while confirmation of a strong expansion in US GDP in the second quarter may bolster the ‘greenback’.
Canadian dollar (CAD) buoyed as crude prices climb
The oil-linked Canadian dollar (CAD) rose against its weaker peers yesterday as a continued rise in crude prices underpinned the currency.
Canada’s latest wage data could impact CAD today, with signs of cooling wage growth potentially undermining the ‘loonie’ by adding to Bank of Canada (BoC) rate cut expectations.
Data releases
16:00 EUR German GfK Consumer Confidence (Oct)
20:00 GBP CBI Distributive Trades (Sep)
22:30 USD Durable Goods Orders (Aug)
22:30 CAD Average Weekly Earnings (Jul)
22:30 USD GDP Growth Rate (Q2)
22:30 USD Initial Jobless Claims (20/Sep)