Australian Dollar (AUD) Suffers as Risk Aversion and Commodities Tumble
The Australian Dollar (AUD) traded down against the majority of its peers yesterday as a risk-off mood dented ‘Aussie’ prospects alongside a lack of data and waning demand for commodities.
Copper and platinum are down significantly after Chinese Prime Minister Li said that China would implement ‘market tools’ in order to keep commodity prices stable. As Australia’s biggest trading partner, Chinese demand has a significant effect on AUD trading.
Minutes from the latest Reserve Bank of Australia (RBA) meeting may influence the ‘Aussie’s trading direction today, while Thursday’s PMI data will likely drive movement later in the week.
Pound (GBP) Falls as Gas Prices Subdue Trading Sentiment
The Pound (GBP) fell against the majority of its peers yesterday on a risk-off mood, as soaring gas prices depress business prospects.
Gas prices in the UK have risen about 455% in the past year. Leading some businesses to halt operations at peak times, raising concerns over the resilience of the UK’s economic recovery.
Looking ahead, the Pound is likely to seek direction later in the week on the Bank of England (BoE)’s interest rate decision. If policymakers strike a hawkish tone, GBP is likely to find support.
Euro (EUR) Trades Mixed as Data Impresses, USD Strength Exerts Pressure
The Euro (EUR) traded mixed against its peers yesterday as impressive German PPI data elevated trading sentiment, only for strength in the US Dollar (USD) to cap EUR gains.
German PPI expanded by almost double the expected percentage over the month of August: producer prices increased to 115.60 points from 113.90 points in July of 2021, 12% higher than this time last year.
German and Eurozone PMI data on Thursday morning could spur movement in the Euro going forwards, with USD dynamics also influencing trading direction.
US Dollar (USD) Bolstered by Risk-Off Sentiment
The US Dollar (USD) enjoyed strong support at the start of this week’s session as a prevailing risk-off mood saw investors favour the safe-haven currency.
This cautious mood came as the potential collapse of Chinese construction giant Evergrande rippled through equity markets.
Looking ahead, the US Dollar might trade in a more limited ranged today, with USD investors potentially reluctant to make any aggressive bets ahead of the Federal Reserve interest rate decision on Wednesday.
Canadian Dollar (CAD) Weakens as Oil Prices Sink
The Canadian Dollar trended lower through Monday’s trading session as the appeal of the commodity linked ‘Loonie’ was undermined by a drop in oil prices.
Also weighing on CAD exchange rates at the start of the week was the uncertainty surrounding Canada’s election.
New Zealand Dollar Retreats in Bearish Trade
The New Zealand Dollar (NZD) also fell victim to souring market sentiment on Monday, with the ‘Kiwi’ retreating against the majority of its peers.
Data Releases
| Sep 21st 11:30 | AUD | RBA Minutes | |
| Sep 21st 20:00 | GBP | CBI Industrial Trends Orders (Sep) | 15 |