Australian dollar (AUD) strengthens amid RBA rate hike speculation
The Australian dollar (AUD) rallied yesterday after inflation unexpectedly rose from 3.6% in September to 3.8% in October.
The figures fuelled bets that the Reserve Bank of Australia (RBA) could raise interest rates next year, with inflation above target and heading higher.
Market-moving Australian data is absent from the calendar today. Therefore, the global market mood could determine the risk-sensitive currency’s direction.
New Zealand dollar (NZD) jumps following RBNZ decision
The New Zealand dollar (NZD) leapt higher yesterday in the wake of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
Although the RBNZ cut rates, as expected, it signalled that it may be at the end of its easing cycle.
Today, the ‘kiwi’ could build on yesterday’s gains, after retail sales growth edged up from 0.5% in the second quarter to 0.6% in the third. However, an expected deterioration in business confidence could offset the upside.
Pound (GBP) firms as autumn budget unveiled
The pound (GBP) was volatile yesterday as markets reacted to the UK autumn budget, as well as the leaked release of the Office for Budget Responsibility’s (OBR) accompanying forecast.
Sterling managed to trend slightly higher overall, as an end to the budget uncertainty and upwardly revised growth forecasts for 2025 helped fuel a modest relief rally.
The autumn budget may continue to drive GBP movement today as markets digest the plans. Sterling may slip if investors grow worried that the high tax burden could weigh on the UK economy.
Euro (EUR) subdued as market mood improves
The euro (EUR) was mixed yesterday, with the safer single currency weakening against riskier rivals and wavering elsewhere amid a risk-on market mood.
Uncertainty over the peace plan proposals to end the Russia-Ukraine war and some mixed movement in the US dollar (USD), with which EUR is negatively correlated, also contributed to the euro’s lack of a clear direction.
Expected improvements in German consumer confidence and Eurozone economic sentiment may support EUR today. Additionally, a hawkish tone in the European Central Bank’s (ECB) monetary policy meeting minutes could underpin the euro.
US dollar (USD) slips amid risk-positive trade
The US dollar fell yesterday as a cheery market mood sapped demand for the safe-haven ‘greenback’.
USD was able to recoup some losses during the European trading hours, thanks in part to a drop in initial jobless claims, although the ongoing risk-on mood capped its recovery.
American economic data is absent from the calendar today. As a result, market risk appetite could drive movement in the safe-haven US dollar.
Canadian dollar (CAD) muted by softer oil prices
The crude-linked Canadian dollar (CAD) faced some choppy movement yesterday, with the ‘loonie’ slipping against stronger peers amid ongoing weakness in oil prices.
Turning to today, Canada’s latest average earnings data is due out. If wage growth slowed in September, CAD could soften.
Data releases
07:45 NZD Retail Sales (Q3)
10:00 NZD ANZ Business Confidence (Nov)
17:00 EUR German GfK Consumer Confidence (Dec)
20:00 EUR Economic Sentiment (Nov)
22:30 EUR ECB Monetary Policy Meeting Accounts
23:30 CAD Average Weekly Earnings (Sep)