Australian dollar (AUD) gains capped by weak Chinese factory figures
Trade in the Australian dollar (AUD) was mixed at the start of this week’s session.
While AUD benefitted from a broadly upbeat market mood, these gains were capped by a surprise contraction in China’s factory sector last month, which raised concerns about the potential knock-on impact on demand for Australian exports.
In the absence of notable domestic economic indicators, the ‘Aussie’ may remain tied to market risk dynamics today, potentially providing additional support if risk sentiment continues to improve.
New Zealand dollar (NZD) wobbles amid profit-taking
The New Zealand dollar (NZD) wavered on Monday, as profit-taking limited the currency’s upside potential.
Much like the ‘Aussie’, movement in the ‘kiwi’ is likely to be linked to risk appetite today.
Pound (GBP) muted on downbeat UK growth forecast
The pound (GBP) was subdued through yesterday’s session amid forecasts for a notable slowdown in UK economic growth in 2026.
Analysts at KPMG predict the UK economy will expand by just 1% next year, as rising unemployment and weak consumer sentiment weigh on growth.
UK economic data is in short supply today, potentially leaving the pound directionless through today’s session.
Euro (EUR) buoyed by USD weakness
The euro (EUR) strengthened on Monday, with the single currency drawing the bulk of its support from its negative correlation with the US dollar (USD)
This allowed the euro to shrug off November’s downwardly revised Eurozone manufacturing PMI.
The spotlight today will be on the Eurozone’s latest consumer price index, with the euro likely to firm if last month’s rise in inflation cements expectations that the European Central Bank’s (ECB) cutting cycle is over.
US dollar (USD) pressured by dovish Fed bets
The US dollar got off to a poor start this week, amid growing confidence that the Federal Reserve will cut interest rates next week.
These losses were then compounded by the latest ISM manufacturing PMI, which reported a deeper-than-expected contraction in the US factory sector last month.
Coming up, USD investors will look to a speech by Fed Chair Jerome Powell for fresh impetus today. If he pushes back at all on the dovish narrative surrounding US monetary policy, it could help the US dollar to claw back some of its losses.
Canadian dollar (CAD) steady as oil price rise
The Canadian dollar (CAD) held its ground on Monday, with the commodity-linked currency drawing support from rising oil prices.
The ‘loonie’ is likely to remain sensitive to oil price dynamics through today’s session, potentially carving out some gains if crude continues to appreciate.
Data releases
11:00 USD Fed Powell Speech
20:00 EUR Inflation Rate (Nov)