Australian dollar (AUD) fluctuates following PMI slowdown
Trade in the Australian dollar (AUD) was mixed on Friday. AUD sentiment was initially subdued as Australia’s latest PMIs confirmed service sector growth slowed to a three-month low in September.
However, a positive shift in risk appetite then allowed the ‘Aussie’ to catch some bids through the European trading session.
Turning to the start of this week, a lull in domestic releases will likely leave the ‘Aussie’ highly sensitive to market risk dynamics.
New Zealand dollar (NZD) mixed amid uneven mood
The New Zealand dollar (NZD) also fluctuated at the end of last week amid shifting market sentiment.
Expect the ‘kiwi’ to continue to track global risk appetite through today’s session, in the absence of any market-moving NZD data.
Pound (GBP) undermined by disappointing PMI
The pound (GBP) struggled to attract support at the end of last week’s session in response to the UK’s latest PMI data.
September’s finalised index was revised down from 51.9 to just 50.8, with the UK’s largest wealth-generating sector suffering its worst growth since April, and resulting in overall private sector growth all but flatlining last month.
UK economic releases are in short supply at the start of this week, potentially leaving movement in the currency to be driven by wider market trends.
Euro (EUR) supported by weak USD demand
The euro (EUR) trended broadly higher on Friday, with demand for the single currency firming thanks to its strong negative correlation with the US dollar (USD).
However, these gains remained limited in scope after a softer-than-expected Eurozone producer price index reading earlier in the session.
Today sees the release of the Eurozone’s latest retail sales figures. Economists predict that sales growth rebounded in August following a slump in July, which could provide a boost for the euro.
US dollar (USD) stumbles as US service sector stalls
The US dollar (USD) closed last week’s session on a sour note, following the release of a weaker-than-expected ISM services PMI.
September’s index fell from 52.0 to 50, missing forecasts for a more modest fall to 51.7, revealing that growth in the US service sector actually stalled last month.
Amid the ongoing shutdown and uncertainty over its delays to key economic indicators, which may impact the Federal Reserve’s outlook on policy, the US dollar is likely to remain subdued today.
Canadian dollar (CAD) steady as oil prices tick up
The Canadian dollar (CAD) held steady on Friday, aided by a modest rebound in oil prices that arrested some of the loonie’s earlier losses.
However, with OPEC members reportedly agreeing to boost crude output over the weekend, the recovery may prove short-lived, with CAD likely to face renewed pressure if oil prices resume their slide.
Data Releases
19:00 EUR Retail Sales (Aug)