Australian dollar (AUD) buoyed by USD weakness
The Australian dollar (AUD) edged higher at the start of this week, buoyed in large part by a softer US dollar (USD).
As USD demand faltered, risk appetite firmed, and capital flowed back into higher-yielding assets, such as the ‘Aussie’.
The Reserve Bank of Australia (RBA) will deliver its latest interest rate decision later today. No policy changes are expected this month, and if the bank maintains its hawkish tone, AUD exchange rates are likely to strengthen.
New Zealand dollar (NZD) wavers amid local economic concerns
Trade in the New Zealand dollar (NZD) was uneven on Monday as domestic economic jitters countered the lift from improving risk sentiment.
In the absence of any notable domestic data, the ‘kiwi’ may remain sensitive to local headwinds and wider market risk appetite today.
Pound (GBP) underpinned by BoE Ramsden’s inflation warning
Trade in the pound (GBP) was broadly positive yesterday, in response to remarks from Bank of England (BoE) Deputy Governor Dave Ramsden, warning that UK inflation will continue to accelerate for a little while longer.
However, the pound’s upside potential remained limited as the Labour Party conference got underway, with GBP investors concerned about a potential shift to the left that could see the government commit to more spending.
Barring a revision to the UK’s second-quarter GDP figures, the direction of the pound is likely to remain linked to BoE commentary, with a hawkish consensus potentially propelling Sterling higher.
Euro (EUR) underpinned by USD weakness
The euro (EUR) strengthened on Monday, with the single currency attracting support as the US dollar faltered.
Additional support came courtesy of the Eurozone’s latest economic sentiment index, amid a surprise improvement in morale this month.
Coming up, Germany’s consumer price index could provide some lift for the euro later today as an expected uptick in inflation is likely to cement bets that the European Central Bank’s (ECB) cutting cycle is over.
US dollar (USD) slides on government shutdown threat
The US dollar stumbled out of the gate this week as the US stares down a potential government shutdown on Tuesday evening.
USD investors were also wary ahead of a string of US labour releases, some of which could be delayed in the event of a shutdown.
Potentially adding to the pressure on the US dollar today will be an expected decline in US job listings in the latest US Job Openings and Labor Turnover survey (JOLTs).
Canadian dollar (CAD) softens as oil prices slip
The Canadian dollar (CAD) weakened on Monday, with the commodity-linked currency tracking oil prices lower.
Expect the ‘loonie’ to extend these losses through today’s session if oil prices continue to depreciate.
Data releases
14:30 AUD RBA Interest Rate Decision
16:00 GBP GDP (Q2)
21:50 GBP BoE Lombardelli Speech
22:00 EUR German Inflation Rate (Sep)
22:00 GBP BoE Ramsden Speech
22:50 EUR ECB Lagarde Speech
23:25 GBP BoE Mann Speech
00:00 USD JOLTs Job Openings (Aug)