Australian dollar (AUD) pulls back as sentiment sours
The Australian dollar (AUD) initially enjoyed some support yesterday thanks to rising commodity prices and stronger-than-expected Chinese manufacturing data.
However, the risk-sensitive ‘Aussie’ retreated during European trade as the market mood soured.
Australia’s latest GDP figures are in focus today. Growth is expected to have remained stable in the second quarter, although any surprises could drive volatility in AUD.
New Zealand dollar (NZD) dented by risk aversion
The New Zealand dollar (NZD) weakened yesterday as the risk-off mood weighed on the ‘kiwi’.
Today, the spotlight falls on the Reserve Bank of New Zealand’s (RBNZ) interest rate decision. An expected rate hike could lift the ‘kiwi’.
Pound (GBP) buoyed by BoE bets
The pound (GBP) had some success yesterday, as the recent rise in oil prices revived bets that the Bank of England (BoE) will hike interest rates this year.
The odds for a rate increase in November rose to around 70%, while markets see an 80% probability of a second hike by February.
With British data releases thin on the ground today, Sterling could struggle to find a clear direction.
Euro (EUR) struggles despite rising inflation
The euro (EUR) was subdued yesterday, with the common currency struggling against its stronger peers due to its negative correlation with the rising US dollar (USD).
The Eurozone’s latest consumer price index failed to lift EUR. Although headline inflation accelerated as forecast in August, core inflation unexpectedly cooled.
Looking forward, EUR may be muted today amid a lack of economic data from the Eurozone.
US dollar (USD) firms in risk-averse trade
The US dollar climbed yesterday as Federal Reserve interest rate hike bets and a risk-off mood underpinned the currency.
However, USD trimmed its gains in the evening after the latest ISM manufacturing PMI for the US missed forecasts.
Turning to today, the latest US factory orders data could influence the ‘greenback’. A forecast recovery in July could lift USD.
Canadian dollar (CAD) undermined by trade war fears
The crude-linked Canadian dollar (CAD) was mixed yesterday, despite rising oil prices, with CAD losing ground against its stronger rivals due to US-Canada trade tensions.
The Bank of Canada (BoC) is due to announce its latest interest rate decision today. However, with no change to policy expected, trade news and oil price dynamics could drive the Canadian dollar.
Data releases
11:30 AUD GDP Growth Rate (Q2)
12:00 NZD RBNZ Interest Rate Decision
23:45 CAD BoC Interest Rate Decision
00:00 USD Factory Orders (Jul)