Australian dollar (AUD) bolstered by hawkish RBA bets
The Australian dollar (AUD) outperformed the majority of its peers yesterday amid increasingly hawkish bets for Reserve Bank of Australia (RBA) monetary policy.
Wednesday’s hotter-than-forecast inflation print has turbocharged interest rate expectations, with markets now overwhelmingly expecting at least one hike before the end of 2026.
Looking ahead, so long as there is not a material deterioration in risk appetite, RBA rate hike bets may allow the ‘Aussie’ to maintain its positive momentum through to the end of the week.
New Zealand dollar (NZD) wobbles amid uneven market mood
A fluctuating market mood resulted in erratic trade in the New Zealand dollar (NZD) on Thursday, with this volatility compounded by domestic political uncertainty.
Expect further fluctuations in the ‘kiwi’ today as it likely remains sensitive to market risk dynamics through the remainder of the session.
Pound (GBP) listless in quiet trade
The pound (GBP) was left directionless yesterday as a lull in UK economic data left the currency without a clear catalyst for movement.
Movement in the UK bond market was also minimal, further limiting any impetus for Sterling.
UK data remains in short supply today, which may leave movement in the pound to be primarily driven by its peers.
Euro (EUR) flat as ECB minutes offer few surprises
The euro (EUR) held steady on Thursday as the minutes from the European Central Bank’s (ECB) July policy meeting broadly aligned with expectations.
The minutes highlighted policymakers’ ongoing inflation concerns and the general consensus that another rate hike will likely be warranted.
Coming up, the euro may tick higher today if data shows that Eurozone economic sentiment continued to improve this month.
US dollar (USD) holds steady ahead of Warsh speech
The US dollar (USD) was confined to a narrow range yesterday, with the currency entering a holding pattern ahead of Federal Reserve Chair Kevin Warsh’s speech at the US central bank’s annual Jackson Hole symposium.
Investors are looking to Warsh for clues over how the Fed intends to balance persistent inflation against signs of weakness elsewhere in the US economy.
A hawkish message from Warsh later today could see the US dollar climb higher, although unless his remarks are enough to revive bets for a September rate hike, the upside may be limited.
Canadian dollar (CAD) flat amid ongoing trade war fears
The Canadian dollar (CAD) was muted on Thursday as ongoing trade war jitters and retreating oil prices suppressed investor demand.
Turning to today’s session, the ‘loonie’ may get a reprieve as Canada’s latest GDP figures are forecast to report that growth rebounded sharply in the second quarter, after stalling at the start of the year.
Data Releases
19:00 EUR Economic Sentiment (Aug)
22:30 CAD GDP (Q2)
00:00 USD Fed Chair Kevin Warsh Speech