Australian dollar (AUD) rallies on hawkish RBA bets
The Australian dollar (AUD) struck new multi-month highs against many of its peers yesterday as the currency continued to be underpinned by Reserve
Bank of Australia (RBA) interest rate speculation.
However, these gains were capped as Australian trade data reported a shock contraction in exports at the start of the third quarter.
In the absence of any notable domestic data today, any movement in the ‘Aussie’ is likely to be tied to market risk dynamics, potentially paving the way for further gains if the mood remains upbeat.
New Zealand dollar (NZD) bolstered by risk-on flows
The New Zealand dollar (NZD) also firmed on Thursday, with the ‘kiwi’ recovering some of its recent losses amid an improvement in market risk appetite.
The ‘kiwi’ may maintain a positive trajectory today if market sentiment continues to improve.
Pound (GBP) extends losses despite easing bond market pressure
The pound (GBP) softened against most of its peers yesterday, with the currency still feeling the lingering effects of the recent bond market turmoil, despite a sharp fall in UK borrowing costs.
This was reinforced by the release of the UK’s latest services PMI, as August’s finalised index saw growth revised lower.
Bank of England (BoE) Governor Andrew Bailey will speak later today, with his remarks potentially applying pressure to Sterling if they are interpreted as cautious.
Euro (EUR) firms as Eurozone PPI jumps
The euro (EUR) trended broadly higher on Thursday as the Eurozone’s latest producer price index outpaced expectations.
Coupled with Tuesday’s consumer price index, this points to an acceleration of inflationary pressures in the Eurozone and underpinned bets that the
European Central Bank (ECB) will tighten monetary policy beyond a widely expected rate hike next week.
The publication of Germany’s latest industrial data could act as a headwind for the euro today as economists forecast a sharp slowdown in factory order growth in July.
US dollar (USD) slips despite impressive PMI data
The US dollar (USD) retreated through yesterday’s session as a continued recovery in market risk appetite limited demand for the safe-haven currency.
The pullback in USD was also unaffected by the latest ISM services PMI, despite August’s index reporting the US service sector expanded at its fastest pace in six months.
The latest US non-farm payroll report will be the primary focus for markets today, with the US dollar poised to fall if another lacklustre print raises any doubts about a Federal Reserve interest rate hike this month.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) traded with modest support on Thursday as rising oil prices bolstered the appeal of the commodity-linked currency.
Coming up, the ‘loonie’ could come under pressure today if Canada’s own jobs data reports employment growth slowed again last month.
Data releases
16:00 EUR German Factory Orders (Jul)
18:50 GBP BoE Bailey Speech
19:00 EUR Retail Sales (Jul)
22:30 CAD Unemployment Rate (Aug)
22:30 USD Non-Farm Payrolls (Aug)