Australian Dollar (AUD) Slides as Victoria Records Second-Deadliest Day
The Australian Dollar (AUD) struggled in yesterday’s session, although it made gains against a weaker Euro after Victoria recorded its second-deadliest day on record.
AUD sentiment was also hit by news that the Australian government intends to extend a state of emergency by another year, which weighed on the risk sensitive ‘Aussie’.
Looking ahead, the Australian Dollar could suffer further losses if the latest Private Capital Expenditure for the second quarter plummets more than expected. Rising coronavirus cases will also weigh on the riskier currency and may extend any losses.
Pound (GBP) Steady as Traders Await Governor Bailey Speech
The Pound (GBP) held steady against the Dollar but edged higher against the Euro during Wednesday’s session.
However, Brexit uncertainty capped gains and left traders on the sidelines. Some analysts expect a correction in the Pound as GBP factors in the risk of a no-deal Brexit and high levels of unemployment after the government’s furlough scheme ends in October.
Analysts have noted that there are few factors that will provide direction for Sterling, and the biggest scheduled event this week is the speech from Bank of England governor Andrew Bailey at the Jackson Hole symposium.
Sterling traders will focus on the upcoming speech for insight into the UK’s economic recovery, while a dovish Federal Reserve at the Jackson Hole virtual retreat could weigh on the riskier GBP.
Euro (EUR) Slides despite Hopes of Further Stimulus in France and Germany
The Euro (EUR) tumbled on Wednesday despite hopes of additional stimulus in Germany and France. Germany’s coalition parties agreed to extend economic stimulus to a cost of up to €10 billion while France is set to present an economic recovery plan next week.
Yesterday morning’s economic data offered the Euro some support as the latest data from France revealed consumer confidence held steady in August as unemployment worries fell to the lowest level since April.
The single currency could claw back some losses today following the release of France’s business confidence data. If confidence increases more than forecast in the bloc’s second largest economy, it could boost EUR.
US Dollar (USD) Struggles Ahead of Key Fed Powell Speech
The US Dollar (USD) struggled to make gains during yesterday’s session after core US capital goods orders slowed in July, but durable goods orders jumped by a higher-than-forecast 11.2%.
However, investors refrained from taking riskier bets ahead of the upcoming key speech from the head of the US Federal Reserve at the annual Jackson Hole retreat.
All eyes will be on Jerome Powell today as markets await the highly-anticipated speech, with traders expecting the head of the Federal Reserve to unleash a softer policy stance towards US inflation. Added to this, markets have been bracing for Powell to announce further steps to help support the world’s largest economy.
Canadian Dollar (CAD) Struggles despite Oil Prices Holding Near Five-Month Highs
The Canadian Dollar (CAD) suffered losses during Wednesday’s session despite oil prices holding near the highest level since March.
Prices were supported by US oil producers shutting the majority of offshore production in the Gulf of Mexico ahead of Hurricane Laura. Added to this, a fall in US oil inventories also supported prices, although gains were capped on renewed coronavirus worries after reports this week revealed re-infection in Covid-19 patients.
Looking ahead, the ‘Loonie’ could make some gains if June’s average weekly earnings rise more than expected and oil prices continue to rise.
New Zealand Dollar (NZD) Muted as NZ Crude Oil Dries Up for the First Time in 34 Years
The New Zealand Dollar (NZD) remained largely flat but made gains against a weaker Euro during Wednesday’s session.
The latest trade balance data from New Zealand revealed that for the first time in 34 years imports of crude oil to the country dried up. Data from the past three months revealed that total imports were holding up, although quite low. This led to the smallest annual trade deficit since October 2014.
Looking ahead, the ‘Kiwi’ is likely to react to the latest changes in risk appetite. A dovish speech from the Federal Reserve’s Chair, Jerome Powell, will weigh on risk sentiment and send NZD lower.
Upcoming Data
11:30 AUD Private Capital Expenditure (Q2) -8.7%
16:45 EUR France Business Confidence (Aug) 85
22:30 CAD Average Weekly Earnings (Jun) 8.6%
22:30 USD GDP 2nd Estimate (Q2) -32.9%
22:30 USD Initial Jobless Claims (22/Aug) 1004K
23:10 USD Fed Chair Powell Speech