Australian Dollar (AUD) Drops on Dovish RBA Speech
The Australian Dollar (AUD) fell against the majority of its peers yesterday as a dovish speech from Reserve Bank of Australia (RBA) Governor Philip Lowe depressed trading sentiment.
Governor Lowe predicted further economic contraction in the September quarter, while defending the RBA’s tapering extension. He also debunked rumours of a 2022/23 rate hike, insisting that such a move would be ‘difficult to understand’ given ongoing Covid headwinds.
Looking ahead, today’s Westpac consumer confidence data threatens to exert pressure on the ‘Aussie’: employment data on Thursday may also weigh upon AUD if unemployment is shown to have risen.
Pound (GBP) Strengthens on UK Employment Data
The Pound (GBP) climbed on Tuesday as UK employment data bolstered GBP sentiment. Average earnings for the month of July rose by 8.3% and unemployment fell, albeit fractionally.
Economists believe the data reflects a ‘hiring frenzy’ – into August, payrolled employment rose by almost quarter of a million as workers rejoined the labour market.
Today’s inflation data will likely be the main driver of movement for the Pound – if the 2.9% predicted is achieved, GBP will likely enjoy tailwinds on higher chances of imminent policy tightening from the Bank of England (BoE).
Euro (EUR) Rises on USD Weakness, Capped by Delta Fears
The Euro (EUR) found support through yesterday’s session as a result of the strong negative correlation between the US Dollar (USD) and the single currency, after the latter weakened.
Headwinds over dovish forward guidance from the European Central Bank (ECB) seem to have abated, but EUR gains are limited by ongoing Covid concerns and the potential of Federal Reserve tapering.
Today’s industrial production figures may hold some sway over euro movement, while speeches from the ECB’s Schnabel and Lane will likely provide additional trading stimuli.
US Dollar (USD) Weakens on Poor Inflation Data
The US Dollar weakened against the majority of its peers overnight on Tuesday in response to the US consumer price index.
On a yearly basis, core inflation also printed marginally lower than expected, falling on July’s figure. Economic slowdown was driven by declining costs for used cars and trucks and transportation services.
Today’s import and export prices may help USD to recoup gains later tonight, if losses are minimal: later in the session, US industrial production may also inspire some movement.
Canadian Dollar (CAD) Trades Mixed Despite Oil Tailwinds
The Canadian Dollar (CAD) traded in a mixed range against its peers yesterday, despite a price rise for WTI crude. Oil prices are the main driver for CAD dynamics and often inspire significant movement.
This afternoon’s CPI data will likely bolster the ‘Loonie’ as domestic inflation is expected to have accelerated in August.
New Zealand Dollar (NZD) Slides on AUD Weakness
The New Zealand Dollar (NZD) fell yesterday against its peers as weakness in the Australian Dollar exerted downside pressure. As New Zealand’s closest trading partner, Australia’s currency dynamics often inspire movement in the ‘Kiwi’.
Thursday’s GDP release will likely drive further movement – if the data shows a rise as expected, NZD will likely find support.
Data Releases
Sep 15th 10:30 AUD Westpac Consumer Confidence (Sep) 109
Sep 15th 16:00 GBP Inflation Rate (Aug) 2.9%
Sep 15th 19:00 EUR Eurozone Industrial Production (Jul) 0.6%
Sep 15th 22:30 CAD Inflation Rate (Aug) 3.9%
Sep 15th 22:30 EUR ECB Schnabel Speech N/A
Sep 15th 22:30 USD Export Prices (Aug) 17.5%
Sep 15th 22:30 USD Import Prices (Aug) 9.7%
Sep 15th 23:15 USD Industrial Production (Aug) 0.4%