Australian Dollar (AUD) Gains despite ‘Real’ Unemployment Rate to Rise
The Australian Dollar (AUD) rallied at the start of the week on a risk-on mood after US regulators approved a treatment for coronavirus patients ahead of the Republican National Convention.
The ‘Aussie’ made significant gains despite the Australian treasury stating that effective, or ‘real’ unemployment will jump above 13%.
Looking ahead, the Australian Dollar could continue to benefit from the improvement in risk appetite, but gains could be limited as markets worry about the Australian labour market.
Pound (GBP) Struggles against Last Week’s Brexit Pessimism
The Pound (GBP) slipped on Monday against the Euro but remained largely flat against the majority of its main rivals thanks to lingering concerns over Brexit weighing on the currency.
While Sterling’s losses against the US Dollar slowed after plummeting more than 1% at the end of last week, traders remained focused on the ongoing Brexit stalemate as both negotiators from London and Brussels said that no real progress had been made during the latest round of talks.
Looking ahead, with uncertainty, traders will remain focused on upcoming speeches from Bank of England (BoE) policymakers as any hints about negative interest rates could send the Pound lower.
Euro (EUR) Boosted by Progress in Developing a Coronavirus Treatment
The Euro (EUR) made gains against a handful of currencies, including a weaker US Dollar during Monday’s session. Signs of progress in developing a coronavirus treatment offset increased fears about a resurgence of coronavirus cases across the bloc.
However, Germany, France and Spain have all seen a jump in coronavirus cases, with leaders looking at tightening travel restrictions to curb these outbreaks.
Looking ahead, the single currency could suffer losses during Tuesday’s session as the final German GDP will show growth tumbled, although upbeat business climate data for August could offer some support.
US Dollar (USD) Traders Await Fed Powell’s Speech
The US Dollar (USD) edged lower on Monday, although losses were limited as traders look ahead to the US Federal Reserve’s annual Jackson Hole symposium. Traders will look to this for further guidance on US monetary policy when Chair Jerome Powell speaks on Thursday.
While ‘Greenback’ sentiment improved during yesterday’s session thanks to upbeat business activity and home sales, traders were concerned that further monetary policy easing would be needed from the Fed to keep economic growth going.
Looking ahead, if the US House Price Index improves more than expected in June, it would offer the US Dollar an upswing in support later today.
Canadian Dollar (CAD) Muted despite Boost to Oil Prices
The Canadian Dollar (CAD) remained largely flat, but struggled against the Australian Dollar after oil prices rose during Monday’s session.
Oil prices rose after storms moved towards the Gulf of Mexico, which shut off more than half of oil production in the region. Prices also received a boost on upbeat signs of a coronavirus treatment from the US.
Looking ahead, the oil-sensitive ‘Loonie’ could edge higher during today’s session if oil prices continue to rise.
New Zealand Dollar (NZD) Struggles as PM Extends Auckland Lockdown
The New Zealand Dollar (NZD) performed poorly compared to other riskier assets as the country’s Prime Minister extended the coronavirus lockdown in Auckland. Jacinda Arden extended the lockdown in the country’s largest city until the end of the week.
Added to this, New Zealand’s retail sales plummeted more than expected in the second quarter, which weighed on NZD sentiment.
Looking ahead, the ‘Kiwi’ could slide further today if traders focus on the extension of lockdown measures in Auckland.
Upcoming Data
16:00 EUR German GDP Growth Rate (Q2) -10.1%
18:00 EUR German Ifo Business Climate (Aug) 98
23:00 USD House Price Index (Jun) 0.3%