Australian dollar (AUD) pressured by RBA repricing
The Australian dollar (AUD) initially stumbled on Friday as the odds for another interest rate cut from the Reserve Bank of Australia (RBA) in November jumped from 50% to 85% in the wake of Thursday’s labour data.
A market correction during European trading hours allowed the ‘Aussie’ to rebound from its worst levels, but renewed USD demand tempered these gains towards the end of the session.
The spotlight for AUD investors today will be on China’s latest GDP figures, where a moderation of growth in the third quarter may limit AUD demand.
New Zealand dollar (NZD) oscillates in volatile trade
The New Zealand dollar (NZD) fluctuated at the end of last week, amid the rapid shifts in market risk appetite.
This week’s session kicks off with the release of New Zealand’s quarterly inflation report. Could an acceleration of inflation temper bets for additional interest rate cuts from the Reserve Bank of New Zealand (RBNZ) and lift the ‘kiwi’?
Pound (GBP) underpinned by BoE Pill remarks
The pound (GBP) drew support at the end of last week from comments from Bank of England (BoE) Chief Economist Huw Pill.
Pill noted that inflation remains far stickier than the BoE had previously thought and warned against cutting interest rates too quickly.
Looking ahead, movement in the pound may be limited at the start of this week, with GBP investors reluctant to alter their positions ahead of Wednesday’s inflation data.
Euro (EUR) buoyed by risk-off flows
The euro (EUR) trended broadly higher on Friday, with the safe-haven single currency benefiting from the negative shift in risk appetite as the session came to a close.
However, the upside in EUR was ultimately capped by the euro’s strong negative correlation with the US dollar (USD).
Germany will publish its latest producer price index later today, with the euro potentially softening if price growth continued to slow in September.
US dollar (USD) firms on US-China trade optimism
The US dollar (USD) looked to end last week’s session on a sour note as fears over the resilience of the US regional banking sector spooked investors.
However, USD sentiment subsequently recovered after remarks from US President Donald Trump, who expressed confidence that a deal could be reached with China when he meets with Chinese President Xi Jinping at the end of October.
With the government shutdown still blocking the release of most US economic releases, movement in the US dollar will likely be influenced by wider market movements today.
Canadian dollar (CAD) buoyed by uptick in oil prices
The Canadian dollar (CAD) edged higher on Friday, supported by a modest uptick in global oil prices.
Coming up, Canada’s latest PPI data may drag on the ‘loonie’ later today, as an expected contraction in producer prices is likely to stoke Bank of Canada (BoC) rate cut bets.
Data Releases
07:45 NZD Inflation Rate (Q3)
16:00 EUR German PPI (Sep)
22:30 CAD PPI (Sep)