Australian dollar (AUD) stumbles on inflation miss
The Australian dollar (AUD) faced significant headwinds yesterday, in response to Australia’s latest consumer price index.
While headline inflation accelerated sharply in August, it still fell short of consensus forecasts, leading the ‘Aussie’ to slump as investors continued to pare back their expectations for future interest rate hikes from the Reserve Bank of Australia (RBA).
Australia’s latest trade figures have the potential to reverse some of AUD’s recent losses this morning, if export growth is shown to have rebounded in August.
New Zealand dollar (NZD) firms as sentiment improves
The New Zealand dollar (NZD) strengthened against the majority of its peers on Wednesday, as positive risk flows bolstered the appeal of the currency.
If this risk-on mood persists into today’s session, we are likely to see the ‘kiwi’ maintain its positive trajectory.
Pound (GBP) rallies as UK GDP revised higher
The pound (GBP) enjoyed broad support through yesterday’s session, following an upward revision to UK GDP in the second quarter.
Growth was revised up from 0.4% to 0.5%, marking the UK as the fastest-growing G7 country in the first half of the year and strengthening bets that the Bank of England (BoE) will raise interest rates in November.
Barring a revision to factory sector growth in the UK’s finalised manufacturing PMI for September, any movement in the pound today is likely to be linked to wider currency trends.
Euro (EUR) wobbles on mixed German data
Trade in the euro (EUR) was mixed on Wednesday, following the release of uneven German economic data.
This saw weaker-than-expected retail sales data temper the potential gains stemming from Germany’s above-forecast inflation print in September.
Coming up, a speech by European Central Bank (ECB) President Christine Lagarde could pile fresh pressure on the euro today if she maintains the dovish tone she struck in remarks made earlier in the week.
US dollar (USD) suffers as Fed rate hike bets slump
The US dollar (USD) faced notable selling pressure yesterday, following a dovish repricing of Federal Reserve interest rate expectations.
Odds for another rate hike in October fell to around 37% from around 70% earlier in the week as the Fed’s preferred inflation indicator printed below expectations in August.
Looking ahead, the US dollar could receive another boost later today, if the latest ISM manufacturing PMI reports that the pace of growth in the US factory sector continued to accelerate last month.
Canadian dollar (CAD) undermined by softer oil prices
The commodity-linked Canadian dollar (CAD) was subdued through Wednesday’s session as oil prices held below $100 per barrel.
Oil price dynamics will likely continue to dictate the direction of the ‘loonie’ today, potentially leading to fresh losses if we see a fresh move lower in the global Brent benchmark.
Data Releases
11:30 AUD Trade Balance (Aug)
18:30 GBP Manufacturing PMI (Sep)
23:30 EUR ECB President Lagarde Speech
00:00 USD ISM Manufacturing PMI (Sep)