Australian dollar (AUD) surges amid improving risk appetite
After initially slipping amid some profit-taking yesterday, the Australian dollar (AUD) rallied in the evening amid a risk-on market mood.
Easing US-China trade tensions and hopes for another Federal Reserve interest rate cut tomorrow both boosted risk appetite among investors.
Turning to today, Australia’s third-quarter inflation figures are the focus. If inflation rises from 2.1% to 3%, as expected, a pullback in Reserve Bank of Australia (RBA) rate cut bets could lift the ‘Aussie’.
New Zealand dollar (NZD) leaps higher amid positive trade
The New Zealand dollar (NZD) also posted strong gains yesterday, with the ‘kiwi’ attracting support thanks to the cheery market mood.
Looking ahead, NZD could trade true to its positive correlation with AUD today, amid a lack of New Zealand data. Market risk appetite may also continue to influence the ‘kiwi’.
Pound (GBP) slumps amid UK fiscal fears
The pound (GBP) plunged to multi-month lows yesterday amid mounting anxiety ahead of the upcoming autumn budget.
News that the Office for Budget Responsibility (OBR) will announce a steeper-than-anticipated downgrade to its productivity growth projections ahead of the budget, resulting in a £20bn hit to the public finances, fuelled fears that Chancellor Rachel Reeves will have to hike taxes next month.
Amid a lack of notable data releases today, budget jitters could continue to impact the pound. If attention remains focused on the challenges facing the Chancellor, Sterling could weaken.
Euro (EUR) slips amid geopolitical concerns
The euro (EUR) fell against its stronger rivals yesterday as growing EU-Russia tensions undermined the single currency.
Recent airspace incursions, cyberattacks and weapons tests by Russia have rattled EUR investors, as the geopolitical risks of the Russia-Ukraine war threaten other European countries.
Eurozone economic data is thin on the ground today, which could leave the euro to trade without a clear direction, particularly ahead of some high-impact events tomorrow.
US dollar (USD) softens as risk appetite returns
The US dollar (USD) faced mixed movement yesterday, although the safe-haven ‘greenback’ eventually weakened against many of its rivals amid a risk-on market mood.
While signs of positive trade discussions between the US and Brazil, Japan and China lent USD modest support, they ultimately added to a buoyant mood among global investors, thereby depriving the American dollar of safe-haven support.
Today could bring muted movement in the US dollar, with USD investors perhaps remaining cautious ahead of tomorrow’s Federal Reserve policy announcement.
Canadian dollar (CAD) firms amid oil forecasts
The crude-linked Canadian dollar (CAD) strengthened yesterday, despite a dip in oil prices, amid expectations that new EU and US sanctions on Russian oil, as well as Ukrainian attacks on Russian refineries, could push oil prices higher in the coming months.
Looking ahead, the Bank of Canada’s (BoC) upcoming interest rate decision is in the spotlight for CAD investors. An expected 25bps cut could weigh on the ‘loonie’.
Data releases
10:30 AUD Inflation Rate (Q3)
23:45 CAD BoC Interest Rate Decision