Australian Dollar (AUD) Rallies on Covid-19 Vaccine Trial News
The Australian Dollar (AUD) benefitted from a general increase in market risk appetite during yesterday’s session, driven by renewed hopes for progress towards a Covid-19 vaccine.
As the AstraZeneca vaccine trial was given the green light to continue, in spite of the recent death of a volunteer, investors found renewed cause for confidence overnight. While a vaccine is still unlikely to come into general use for some months yet, the prospect was enough to lift demand for the risk-sensitive Australian Dollar.
AUD exchange rates could find additional support this morning as October’s manufacturing PMI looks set to pick up on the month.
Pound (GBP) Bullishness Fades as UK-EU Brexit Talks Resume
The Pound (GBP) failed to make further gains following its initial bout of optimism over UK-EU Brexit trade talks restarting for long.
Markets turned wary once again as the two sides remain at odds over key issues, with the potential for talks to break down before the end of the year. An unexpected improvement in the CBI industrial trends orders index also failed to give the Pound any boost against its rivals during the European session.
A slowdown in September’s UK retail sales growth may keep the Pound on the back foot in the near term, given the role consumer spending plays in supporting economic growth.
Euro (EUR) Slips as Markets Brace for ECB Dovishness
The Euro (EUR) was left on the back foot as markets continued to brace for the prospect of further European Central Bank (ECB) policy action to come.
Increasing bets that the ECB could pave the way for some December policy action at next week’s meeting put pressure on EUR exchange rates.
Meanwhile, growing fears over the health of the Eurozone economy’s recovery amid surging coronavirus cases also put a dampener on the single currency, given speculation that a fresh slowdown could be on the horizon.
Another month of contraction for the Eurozone services PMI could see the single currency trending lower across the board through today’s session.
US Dollar (USD) Recovers Ground as Initial Jobless Claims Hit Eight-Month Low
The US Dollar (USD) recovered some of its lost ground as the number of new initial jobless claims fell to its lowest level since March.
This improvement gave investors cause for confidence, suggesting that the labour market is returning to a stronger footing even amid ongoing political tensions. A downward revision to the previous week’s figure added to the bullish mood, even though a long way is still to go for the US economy to fully recover from the impact of the pandemic.
An uptick in October’s manufacturing PMI may see USD exchange rates gaining further traction this evening, even as anxiety over the upcoming presidential election continues to mount.
Canadian Dollar (CAD) Sees Small Boost on Oil Price Improvement
The Canadian Dollar (CAD) found limited support last night as Brent crude prices staged a small improvement on the day.
With worries over the outlook of the global oil market temporarily diminishing, CAD exchange rates saw limited downside bias. The wider improvement in market risk appetite offered additional support to the Canadian Dollar, with the prospect of a Covid-19 vaccine boding well for the outlook of the Canadian economy.
In the absence of any fresh domestic data, the Canadian Dollar will likely be driven by market sentiment and the global oil market outlook.
New Zealand Dollar (NZD) Looks for Gains on Stronger Inflation Rate
The New Zealand Dollar (NZD) gained traction against its rivals thanks to the general improvement in market sentiment on Thursday.
As investors took a more optimistic view in response to the restarting of the AstraZeneca vaccine trial, worries over the health of the global economy temporarily diminished. Despite the US Dollar seeing some improvement in demand, this failed to weigh on NZD exchange rates.
With forecasts pointing towards an uptick in the headline New Zealand inflation rate the mood towards the ‘Kiwi’ could easily improve further this morning.
Data Releases
08:45 NZD Inflation Rate (Q3) 1.7%
09:00 AUD Manufacturing PMI (Oct) 55.6
17:00 GBP Retail Sales (Sep) 0.4%
19:00 EUR Eurozone Services PMI (Oct) 47
19:00 EUR Eurozone Manufacturing PMI (Oct) 53.1
00:45 USD Manufacturing PMI (Oct) 53.4