Australian dollar (AUD) recovers as risk appetite returns
The Australian dollar (AUD) initially stumbled yesterday as a souring mood dampened demand for the risk-sensitive ‘Aussie’.
However, AUD was able to rebound strongly in the evening as sentiment improved.
Today, an expected easing of Australian consumer inflation expectations could dent AUD, while risk appetite will also likely continue to drive movement.
New Zealand dollar (NZD) plunges on half-point rate cut
The New Zealand dollar (NZD) plummeted yesterday after the Reserve Bank of New Zealand (RBNZ) delivered a larger 50bps cut to interest rates and signalled more cuts to come.
NZD was able to claw back a decent portion of these losses in the evening thanks to a recovery in risk appetite.
Amid a lack of New Zealand economic data today, global risk dynamics could be the primary factor affecting movement in the ‘kiwi’.
Pound (GBP) directionless amid absence of data
The pound (GBP) wavered without a clear direction yesterday as a lack of impactful UK data exposed the currency to volatility.
A shifting market mood also impacted the increasingly risk-sensitive pound, with GBP recouping earlier losses against safer currencies as sentiment improved.
With market-moving UK economic data still thin on the ground today, Sterling could trade without a clear trajectory.
Euro (EUR) weakens following dire German data
The euro (EUR) fell yesterday after German industrial production plunged 4.3% in August, compared to forecasts for a 1% decline.
While Germany’s statistics office said the results were partly due to seasonal factors, the data still raised concerns about the structural challenges facing industry in the Eurozone’s largest economy.
The focus for EUR investors today will be the European Central Bank’s (ECB) policy meeting minutes. Evidence that the ECB is done with interest rate cuts could support the euro.
US dollar (USD) pulls back ahead of Fed meeting minutes
The safe-haven US dollar (USD) started yesterday’s session strong, rising to multi-week highs against some peers thanks to a risk-off market mood.
However, USD retreated during the European trading hours amid some profit-taking ahead of the Federal Reserve policy meeting minutes and an improving appetite for risk.
Fed Chair Jerome Powell is due to speak later today. If he sounds cautious about the pace of future rate cuts, USD could climb.
Canadian dollar (CAD) trades true to USD correlation
The Canadian dollar (CAD) traded broadly in tandem with the US dollar yesterday, due to CAD’s positive correlation with USD.
Looking ahead, oil price movements could impact the crude-linked ‘loonie’ today. The Canadian dollar may track any shifts in oil.
Data releases
10:00 AUD Consumer Inflation Expectations (Oct)
16:00 EUR Balance of Trade (Aug)
21:30 EUR ECB Monetary Policy Meeting Accounts
22:30 USD Fed Chair Powell Speech
22:35 USD Fed Bowman Speech