Australian dollar (AUD) buoyed by hawkish RBA
The Australian dollar (AUD) strengthened yesterday as the Reserve Bank of Australia (RBA) left interest rates unchanged at its latest policy meeting.
The bank also struck a hawkish chord, saying that inflation is likely to exceed forecasts in the third quarter, thereby dampening rate cut bets.
Turning to today, the Ai group industry index is expected to show another decline in activity in August, which could weigh on the ‘Aussie’.
New Zealand dollar (NZD) firms amid risk-on mood
The New Zealand dollar (NZD) also gained ground yesterday, with the currency enjoying its positive correlation with AUD and a risk-on market mood.
New Zealand economic data is absent from the calendar today, potentially leaving NZD to trade on market risk dynamics.
Pound (GBP) muted despite better GDP
The pound (GBP) was subdued yesterday, with GBP investors seemingly unimpressed with an upward revision to year-on-year GDP growth in the second quarter.
Swirling concerns about coming tax rises in the government’s autumn budget continued to be a thorn in the pound’s side, stifling its upside potential.
With UK data in short supply today, Sterling may struggle to find a clear directional bias.
Euro (EUR) choppy despite higher German inflation
The euro (EUR) wavered yesterday, with the common currency wobbling due to its strong negative correlation with a shifting US dollar (USD).
Germany’s consumer price index failed to lift EUR, despite a larger-than-expected rise in inflation in September, as a recovering US dollar pressured the euro in the evening.
Looking ahead, the Eurozone CPI is the focus for EUR investors today. An uptick in inflation across the bloc could boost the euro by cementing bets that the European Central Bank’s (ECB) cutting cycle is over.
US dollar (USD) uncertain amid government shutdown fears
The US dollar wavered slightly lower yesterday amid anxiety among USD investors over a possible government shutdown and a shifting market mood.
Mixed US data in the afternoon added to the uncertain movement, with job openings unexpectedly rising in August while consumer confidence deteriorated more than forecast in September.
Today, USD investors will be looking to the latest ADP employment change figure and ISM manufacturing PMI for fresh impetus. Weak readings from both data releases could undermine the US dollar.
Canadian dollar (CAD) dented by weakening oil
The crude-linked Canadian dollar (CAD) softened against some of its peers yesterday as a decline in oil prices dragged on the currency.
Canada’s latest manufacturing PMI is due for release later today. CAD could come under pressure if factory activity remained in contraction in September.
Data releases
09:00 AUD Ai Group Industry Index (Sep)
19:00 EUR Inflation Rate (Sep)
22:15 USD ADP Employment Change (Sep)
23:30 CAD Manufacturing PMI (Sep)
00:00 USD ISM Manufacturing PMI (Sep)