Australian Dollar (AUD) Supported by Risk-On Mood
The Australian Dollar (AUD) resisted headwinds against its peers on Friday as a risk-on market mood favoured the ‘Aussie’. Despite rising Covid cases and poor retail sales data, AUD clung to its gains, bolstered by optimism surrounding the country’s vaccination progress.
Despite the vaccine rollout beginning as recently as late February, Australia has already fully vaccinated 25.74% of its population; 32.07% excluding under-16s.
Movement in the Australian Dollar is likely to remain closely linked to domestic coronavirus developments over the coming week, with AUD exchange rates likely to weaken if new cases continue to rise.
Pound (GBP) Subdued over Supply Chain Issues
UK supply chain issues were in focus last week as business leaders warned the public that Christmas could be disrupted by shortages of food and gifts. Friday’s distributive trades data supported claims that shops are ‘running very hard just to keep on top of the existing demand.’
The data inspired bearish trading into Friday, as a lack of additional data left Sterling open to losses.
The Pound may remain muted at the start of this week’s session as a Bank holiday in the UK will result in thin trading conditions.
Euro (EUR) Muted on ECB Accounts
The Euro (EUR) also suffered losses on Friday as the latest accounts from the European Central Bank (ECB) were released.
The accounts revealed disagreements between the bank’s policymakers over the wording of forward guidance. The German and Belgian central bank chiefs opposed new wording, arguing that it could be perceived as deviating from the medium-term orientation of the monetary policy strategy.
Looking ahead, EUR investors will be focused on Germany’s consumer price index at the start of this week. Will a strong inflation reading lend some support to the Euro?
US Dollar (USD) Mixed Ahead of Powell Speech
The US Dollar (USD) fought off headwinds in the run-up to Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Symposium on Friday.
The Dollar saw mixed stimulus as several Federal Open Market Committee members predicted an imminent reduction in asset purchases, while others anticipated a delay in tapering as a result of rising Covid cases across America.
Turning to this week’s session, the upcoming release of the latest ISM manufacturing PMI will be the focus for USD investors, with any expected slowing of growth in the factory sector potentially denting the US Dollar.
Canadian Dollar (CAD) Muted by Recent Oil Price Drop
Although WTI recovered somewhat during Friday’s session, the oil’s downturn on Thursday put pressure upon the Canadian Dollar (CAD) which has yet to lift. Exacerbating bearish trading, Canadian data printed below expectations on Friday, with July’s PPI reading sliding to -0.4% as opposed to the predicted 0.1%.
New Zealand Dollar (NZD) Trades Low on Renewed Risk Sentiment
Despite a strong upturn against several peers earlier in the week, the New Zealand Dollar (NZD) levelled on Friday as risk sentiment fluctuated.
A lack of data left the currency open to losses, while a national lockdown extension suppressed NZD trading sentiment. The extension comes as seventy new cases of coronavirus have been identified.
Data Releases
Aug 30th 13:00 EUR German Inflation Rate YoY Prelim 3.9%