Australian dollar (AUD) fluctuates due to US-China trade uncertainty
The Australian dollar (AUD) initially firmed yesterday as US President Donald Trump hailed trade talks with his Chinese counterpart, Xi Jinping, as ‘amazing’ and said a trade deal would be signed in the near future.
However, optimism surrounding the talks quickly faded, with the lack of concrete details unnerving some investors and sending the ‘Aussie’ tumbling through the European trading session.
Australia’s latest producer price index may help underpin the Australian dollar today, as another rise in producer inflation is likely to further reduce the chances of the Reserve Bank of Australia (RBA) cutting interest rates in the near term.
New Zealand dollar (NZD) slides as investors shrug off upbeat business morale
The New Zealand dollar (NZD) also retreated on Thursday as deteriorating market risk appetite overshadowed a surprisingly strong improvement in domestic business confidence.
Movement in the ‘kiwi’ is likely to remain linked to market risk dynamics today, with the ‘kiwi’ poised to extend its losses if risk appetite continues to decline.
Pound (GBP) undermined by UK fiscal challenges
The pound (GBP) struggled to attract support yesterday, amid the anxiety surrounding Chancellor Rachel Reeves’s autumn budget.
These concerns were compounded by calls for the Chancellor to resign for breaking rules regarding the renting of her South London home.
UK economic data remains in short supply today, which may keep the focus on the UK’s fiscal woes, leaving the pound vulnerable to further pressure.
Euro (EUR) muted despite upbeat GDP and ECB rate hold
The euro (EUR) was subdued on Thursday, weighed down by its negative correlation with the US dollar (USD).
While preliminary GDP figures for the third quarter showed growth in the Eurozone economy outpaced expectations and the European Central Bank (ECB) left interest rates on hold again, EUR remained tied to the movement of its peers.
The spotlight today will be on the Eurozone’s latest inflation print. A slight moderation of inflation this month could put modest pressure on the euro, as it may underpin bets for one more rate cut from the ECB next year.
US dollar (USD) bolstered by hawkish Fed
The US dollar appreciated yesterday as it continued to benefit from a hawkish repricing of Federal Reserve interest rate expectations in the wake of the bank’s policy announcement.
While the Fed cut rates as expected, Fed Chair Jerome Powell noted that another cut in December is ‘not a forgone conclusion’.
Looking ahead, USD investors will look to speeches by several Fed policymakers for fresh impetus today. Could a hawkish consensus propel the US dollar higher?
Canadian dollar (CAD) slides as oil prices soften
The commodity-linked Canadian dollar (CAD) trended lower on Thursday in response to falling oil prices.
Canada’s latest GDP figures may place additional pressure on the ‘loonie’ today as markets expect the Canadian economy to have slipped into contraction in September.
Data releases
10:30 AUD PPI (Q3)
20:00 EUR Inflation Rate (Oct)
22:30 CAD GDP (Sep)
23:30 USD Fed Logan Speech