Australian Dollar Stumbles, RBA in Focus
The Australian Dollar (AUD) opened this week’s session on the defensive, being driven lower by market risk aversion as a result of rumours Washington was considering taking action to limit Chinese investment in the US. Also exerting pressure on the ‘Aussie’ was speculation that the Reserve Bank of Australia (RBA) will announce another rate cut today.
If this assessment proves accurate it will be the RBA’s third rate cut this year. The decision could weaken the Australian Dollar, especially if the bank signals more cuts may be on the table.
Pound Bolstered by Upbeat GDP
The Pound (GBP) trended higher yesterday, recouping some of its recent losses in response to the UK’s latest GDP reading. Whilst second quarter growth was confirmed to have contracted by 0.2%, GBP investors seized on the annualised figures which saw Q1 growth revised up from 0.5% to 0.6%.
The UK’s latest manufacturing PMI will be in focus today, with another contraction in domestic factory growth potentially dragging on Sterling.
Euro Slumps on Weak German Inflation Figures
The Euro (EUR) retreated overnight on Monday in response to Germany’s latest consumer price index (CPI). A preliminary reading for September showed German inflation sank from 1.4% to 1.2%, or 0.9% when harmonised with the Eurozone. This fed into fears for the country’s economic outlook.
Could we see this slump reflected in today’s Eurozone CPI figures? The Euro is likely to face further pressure if inflation in the bloc also underperformed last month.
US Dollar Flat on Weak PMI Figures
The US Dollar (USD) initially strengthened yesterday, enjoying broad gains thanks to rising safe-haven demand. However the ‘Greenback’ relinquished these gains overnight after the Chicago and Dallas manufacturing PMI’s both printed below expectations in September.
The US Dollar may struggle to hold its ground later today, with the release of the latest ISM manufacturing PMI. The index revealed a shock contraction in US factory growth in August, with a similarly gloomy reading in September likely to pressure USD exchange rates.
Canadian Dollar Subdued as Oil Prices Slump
The Canadian Dollar (CAD) struggled to find support on Monday as the oil-sensitive ‘Loonie’ was undermined by another slip in crude prices.
CAD exchange rates may remain on the back foot today as well if (as some economists suspect) Canadian GDP figures reveal domestic growth slowed in July.
New Zealand Dollar Close to Multi-Year Lows
The New Zealand Dollar (NZD) faced considerable headwinds at the start of this week’s session, coming close to a multi-year low against the US Dollar as US-China trade uncertainty saw markets turn risk-adverse.
Data Releases
October 1st 08:30 AUD AIG Manufacturing Index (Sep) 52
October 1st 14:30 AUD RBA Rate Decision 0.75%
October 1st 18:00 EUR Manufacturing PMI (Sep) 45.6
October 1st 18:30 GBP Manufacturing PMI (Sep) 47
October 1st 19:00 EUR Inflation Rate (Sep) 1%
October 1st 22:30 CAD GDP (Jul) 0.1%
October 2nd 00:00 USD ISM Manufacturing PMI (Sep) 50.1