Australian Dollar (AUD) Falls on China Growth Concerns
The Australian Dollar (AUD) initially rose against the majority of its peers yesterday morning, as Australia’s Westpac consumer confidence figures printed better than expected. Analysts had predicted a fall from 104.1 in August to 102 for September; instead, confidence rose to 106.2.
However, the ‘Aussie’ subsequently fell back as China growth concerns were exacerbated by weak data, threatening an economic slowdown and applying downside pressure to the country’s trading partners.
Looking ahead, AUD exchange rates could weaken further if data shows that domestic unemployment rose as expected last month.
Pound (GBP) Strengthens as UK Inflation Beats Expectations
The Pound (GBP) enjoyed strong support on Wednesday as UK inflation soared. August’s consumer price index printed at 3.2%, a record high.
According to economists, August’s figures are the first step in a rise that may take inflation to 4.5% by November. While the next few months are expected to be an uncomfortable period for the monetary policy committee, inflation is expected to fall back next year as base factors fade, to below 2% by the end of 2022.
Into today, a lack of UK data is likely to cap Pound gains, although GBP may strengthen if a risk-on mood prevails.
Euro (EUR) Benefits from Strong Production Data
The Euro (EUR) firmed during yesterday’s session as industrial production figures beat expectations. Month-on-month figures were predicted to report 0.6% growth- instead, they grew by 1.5%.
The stronger data for the start of the third quarter comes after the Eurozone economy grew 2.2% in the second quarter, precipitated by the easing of coronavirus restrictions. Such growth has caused the bloc to rebound from a brief recession.
Looking ahead, European Central Bank (ECB) President Lagarde’s speech today will likely influence trading direction. If Lagarde strikes a hawkish tone, the Euro will likely receive a boost.
US Dollar (USD) Muted on Weak US Data
The US Dollar (USD) faced headwinds against the majority of its peers yesterday as poor import/exports data exacerbated recent downside pressure caused by a weak inflation reading.
Both export and import prices missed forecasts by 0.7%, dampening USD sentiment. Industrial production for the month of August met forecasts, while the NY State Manufacturing Index revealed significant growth: neither releases were sufficient, however, to buoy the ‘Greenback’.
Today’s retail sales and employment data offer a change for USD to rebound – expectations are low, however, making headwinds more likely.
Canadian Dollar (CAD) Extends Gains as Inflation Lifts
The Canadian Dollar (CAD) gained against several of its peers yesterday as support was provided by rising oil prices and strong Canadian inflation, which printed at its highest level since 2003.
Into today, a lack of significant Canadian data leaves CAD dynamics at the mercy of oil prices.
New Zealand Dollar (NZD) Trades Mixed on Lack of Data
The New Zealand Dollar (NZD) traded mixed yesterday as poor current account data weighed upon the ‘Kiwi’ alongside tensions in China. Australia’s initial tailwinds may have provided some support, capping losses as a result of the currencies’ positive correlation.
Today’s GDP figures will likely decide NZD’s further movements; if a contraction is revealed, the New Zealand Dollar may encounter pressure.
Data Releases
Sep 16th 08:45 NZD GDP Growth Rate (Q2) 1.3%
Sep16th 11:30 AUD Unemployment Rate (Aug) 4.9%
Sep 16th 22:00 EUR ECB President Lagarde Speech N/A
Sep 16th 22:30 CAD ADP Employment Change (Aug) 180K
Sep 16th 22:30 USD Retail Sales (Aug) -0.8%