Australian dollar (AUD) jumps on hawkish RBA message
The Australian dollar (AUD) got off to a strong start this week, with the currency rallying amid positive risk flows.
These gains were reinforced by hawkish remarks from Reserve Bank of Australia (RBA) Deputy Governor Andrew Hauser, who stressed the need to maintain restrictive monetary policy amid persistent inflation risks.
Australia’s latest consumer and business confidence indexes are set for release today. If sentiment shows signs of improving, it may help to extend the upside in AUD exchange rates.
New Zealand dollar (NZD) buoyed by risk-on mood
The New Zealand dollar (NZD) also strengthened on Monday, courtesy of the risk-positive market mood.
In the absence of any notable NZD data, movement in the ‘kiwi’ is likely to remain tied to market risk dynamics today.
Pound (GBP) gains capped by autumn budget jitter
The pound (GBP) edged higher on Monday, supported by the improvement in market sentiment.
However, GBP’s upside remained limited as anxiety surrounding Chancellor Rachel Reeves’s upcoming autumn budget continued to sap Sterling sentiment.
Looking ahead, GBP exchange rates are likely to come under pressure today as the UK’s latest jobs data is expected to show both a rise in unemployment and a cooling of wage growth, likely stoking bets that the Bank of England (BoE) will cut interest rates next month.
Euro (EUR) muted amid positive risk flows
The euro (EUR) struggled to attract support on Monday as the relief rally across markets limited demand for safe-haven assets.
This was driven by both US funding bill hopes as well as stronger-than-expected inflation figures out of China over the weekend.
The euro may receive a boost later today as the latest German ZEW economic sentiment index is forecast to report morale continued to improve this month.
US dollar (USD) subdued despite US funding bill optimism
The US dollar (USD) opened this week’s session on the defensive following the news that the US Senate narrowly passed a funding bill that could be the first step towards ending the US government shutdown.
While USD investors welcomed the news, it also sparked broader risk optimism, which undermined demand for the safe-haven currency.
Today sees the release of the new week-on-week ADP employment data, with the latest snapshot of the US jobs market potentially weighing on the US dollar if it points to another labour slowdown.
Canadian dollar (CAD) underpinned by rising oil prices
The Canadian dollar (CAD) firmed on Monday as rising oil prices reflected positively on the commodity-linked currency.
Assuming oil prices continue to appreciate, the ‘loonie’ may maintain this positive trajectory through today’s session.
Data releases
09:30 AUD Consumer Confidence (Nov)
10:30 AUD Business Confidence (Oct)
17:00 GBP Unemployment Rate (Sep)
20:00 EUR German ZEW Economic Sentiment Index (Nov)
23:15 USD ADP Employment Change