Australian dollar (AUD) bolstered by trade deal hopes
The Australian dollar (AUD) got off to a stellar start this week, following the news that the US and China had agreed on a ‘framework’ for a trade deal.
The development comes as a major relief for AUD investors who feared the impact a trade war between the two nations could have on Australia’s export-driven economy.
Assuming trade headlines remain positive, the ‘Aussie’ is likely to continue to appreciate through today’s session.
New Zealand dollar (NZD) lifted by positive risk flows
The New Zealand dollar (NZD) also strengthened on Monday as hopes of a US-China trade deal boosted risk appetite.
Like its antipodean cousin, the ‘kiwi’ is likely to maintain a positive trajectory if this trade optimism persists.
Pound (GBP) benefits from market optimism
The pound (GBP) firmed yesterday as Sterling sentiment was also improved by an uptick in global risk appetite.
However, a continued decline in UK retail sales volumes this month ensured the pound’s upside potential remained relatively modest.
UK economic releases are in short supply today, likely shifting the focus back to Chancellor Rachel Reeves’s upcoming budget and what measures it will include to plug the roughly £20bn gap in government finances.
Euro (EUR) steady as German business morale rises
The euro (EUR) was stable on Monday, as an improvement in German business sentiment offset the pressures on the single currency amid a strengthening of market risk appetite.
The IFO business climate index rose above forecasts this month, reflecting the improving outlook in the manufacturing sector as the recent decline in new orders finally came to a halt.
Germany’s latest consumer confidence data could support the euro today if morale heading into November improves as forecast.
US dollar (USD) slips amid waning safe-haven demand
The US dollar (USD) retreated through yesterday’s session as the optimistic market mood made the safe-haven currency less attractive to investors.
USD sentiment was also suppressed amid uncertainty surrounding the ongoing US government shutdown and its potential impact on the US economy.
Movement in the US dollar is likely to be limited today, as USD investors err on the side of caution ahead of the Federal Reserve’s interest rate decision on Wednesday.
Canadian dollar (CAD) pressured by additional Trump tariffs
The Canadian dollar (CAD) struggled on Monday as CAD investors reacted to Trump’s move over the weekend to raise tariffs on Canadian goods by another 10%.
Looking ahead, CAD investors may be reluctant to make any aggressive bets today, as they brace for an expected interest rate cut from the Bank of Canada (BoC) in the middle of the week.
Data Releases
17:00 EUR German Consumer Confidence (Nov)