Australian dollar (AUD) bolstered by RBA rate hike
The Australian dollar (AUD) continued to catch bids at the end of last week’s session, with the ‘Aussie’ able to strike fresh multi-month highs against many of its peers.
This bullish momentum was underpinned by Reserve Bank of Australia (RBA) interest rate expectations, which continued to strengthen following the publication of Australia’s GDP figures on Wednesday.
Looking ahead, AUD’s recent gains could leave the currency vulnerable to some profit-taking at the start of this week’s session, particularly if investors turn a little cautious.
New Zealand dollar (NZD) fluctuates amid shifting market mood
The New Zealand dollar (NZD) initially firmed on Friday, before being forced to walk back the bulk of its gains by the end of the session as market risk appetite softened.
In the absence of any notable data, NZD movement during Monday’s session will likely be dependent on market risk appetite, potentially leading to some weakness if the mood sours.
Pound (GBP) subdued by lack of data
The pound (GBP) traded without strong directional bias on Friday, amid the continued absence of any notable UK economic indicators.
GBP investors also appeared unfazed by UK bond market movement, despite borrowing costs falling back to where they were before the recent turmoil.
John Healey will make his first major speech as Chancellor today, with it focusing heavily on growth. A positive response to his comments could help Sterling get off to a strong start this week.
Euro (EUR) undermined by retail sales slump
The euro (EUR) faced modest selling pressure on Friday, as the latest Eurozone economic data made for mixed reading.
While German factory orders outpaced expectations in July, this was overshadowed by a shock contraction in Eurozone retail sales over the same period.
The euro has the opportunity to recoup these losses today, if Germany’s latest industrial production data similarly impresses to Friday’s factory orders release.
US dollar (USD) buoyed by payroll surprise
The US dollar (USD) rallied at the end of last week as the latest US non-farm payroll report showed the US economy added 162,000 jobs in August, substantially outperforming forecasts for a 56,000 increase.
The surprisingly positive data was well received by USD investors, as a resilient USD labour market is likely to encourage the Federal Reserve to raise interest rates later this month.
Turning to the start of this week, the US dollar may look to consolidate its recovery if market sentiment remains broadly cautious.
Canadian dollar (CAD) slips as domestic labour market shrinks
The Canadian dollar (CAD) stumbled on Friday, after Canada’s own jobs data reported a shock contraction in employment growth last month.
The focus for CAD investors will likely revert to oil price dynamics at the start of this week, potentially boosting the ‘loonie’ if uncertainty in the Middle East drives prices higher again.
Data Releases
16:00 EUR German Industrial Production (Jul)
19:00 EUR GDP (Q2)