Australian Dollar (AUD) Supported by Risk-On Market Mood
The Australian Dollar (AUD) continued to climb against the majority of its peers on Friday despite a slightly weaker-than-expected services PMI. The Australian Markit services PMI printed at 42.9 as opposed to the 43.3 anticipated.
The ‘Aussie’ was supported by high risk sentiment as the safe-haven US Dollar (USD) faced headwinds in the run-up to and aftermath of its Nonfarm payrolls release.
Looking ahead, Australia faces the Reserve Bank of Australia (RBA)’s interest rate decision on Tuesday, followed by Wednesday’s NAB business confidence report. If the interest rate stays at 0.1% as is predicted, investors may trade with a bearish attitude.
Pound (GBP) Sinks on Low Services PMI
The UK’s finalised services PMI printed below expectations on Friday at 55, rather than the 55.5 expected. This exacerbated the Pound (GBP)’s downside over a lack of significant data.
Headwinds also persist over the domestic Covid situation, as officials anticipate a surge in cases once children return to school.
Turning to this week, the Pound may struggle to attract much support though the first half of the session amidst the continued absence of notable economic releases.
Euro (EUR) Lifts on Poor US Data
The Euro (EUR) rose up at the end of last week’s session as US Nonfarm Payrolls missed expectations by a far cry.
As a result of the strong negative correlation between EUR and USD, the Euro lifted on the US Dollar’s downside, despite Euro area retail sales printing poorly.
Looking to this week, German factory orders and construction PMI may direct Euro movement, with the former looking to contract and the latter to expand.
The US Dollar (USD) Plummets on Disappointing Nonfarm Payrolls
The US Dollar fell against its peers on Friday as Nonfarm Payroll data missed estimates considerably. The consensus expectation was that 750K new jobs would be added, but the actual figure printed much lower at 235K.
The US services PMI also printed below expectations, albeit marginally: the ISM non-manufacturing PMI managed to exceed forecasts, however, printing 0.2 points above forecasts.
A lack of data on Monday’s session means the US Dollar will seek movement on risk sentiment – which will likely remain subdued given Friday’s data.
Canadian Dollar (CAD) Rises on Stabilising Oil Prices
The Canadian Dollar (CAD) gained against the majority of its peers at the end of last week as WTI oil prices consolidated around $70. Having met highs of $70.61 on Thursday, crude prices dropped down slightly before lifting again during Friday’s session.
Lacking any significant data at the beginning of the week, the ‘Loonie’ will likely continue to align itself with oil dynamics.
New Zealand Dollar (NZD) Gains on Hawkish RBNZ Expectations
The New Zealand Dollar (NZD) trended up against several of its peers on Friday as hawkish expectations for the Reserve Bank of New Zealand (RBNZ) sustained tailwinds.
According to economists at MUFG bank, RBNZ Governors have indicated the probability of rate hikes soon even if COVID-19 remains in the community.
Data Releases
Sept 6th 16:00 EUR German Factory Orders (Jul) -1%
Sept 6th 17:30 EUR German Construction PMI (Aug) 48.9
Sept 6th 18:30 GBP Construction PMI (Aug) 56.9