Australian Dollar (AUD) Weakens amid Broad US Dollar Strength
The Australian Dollar (AUD) weakened against many of its peers on Wednesday due to market sentiment remaining cautious after Tuesday’s risk-sensitive currency selloff, supporting safe-haven demand for the US Dollar.
Energy crises in Europe and China that caused factory production to halt intensified fears of a global economic growth slowdown soured market mood and dented the risk-sensitive ‘Aussie’.
However, Australia’s vaccination rollout looking on course to meet its 70-80% target limited AUD losses.
Looking ahead, the Australian Dollar could come under pressure again today as Chinese manufacturing PMI data is forecast to remain in contraction at 49.5, below the 50 mark which indicates growth. Growth slowdown concerns in Chinese factories could weigh on the China economy proxy ‘Aussie’.
Pound (GBP) Slide Continues amid Fuel Shortages
The Pound (GBP) extended its selloff through Wednesday’s European session as the fuel shortage crisis continued to grip the UK.
Despite UK government reassurances and reports that shortages are easing, GBP investors remain concerned UK economic growth remains under threat due to supply chain fragility, staff shortages, and mounting inflationary price pressures.
Bank of England (BoE) Governor Andrew Bailey’s speech earlier this morning may stabilise the Pound today after he reiterated the central bank’s hawkish stance following last week’s interest rate decision.
Euro (EUR) Dented by USD Strength
The Euro (EUR) slipped yesterday due to its negative correlation with a surging US Dollar amid downbeat global trade.
Data earlier in the session had supported EUR exchange rates and limited losses after September’s Eurozone economic sentiment index 117.8 reading beat expectations, hovering below July’s all-time figure of 119.
German unemployment and inflation released this evening could stoke volatility in the single currency. While the unemployment rate is expected to fall to 5.4%, inflation is forecast to rise again in September, intensifying inflationary pressure fears in the bloc.
US Dollar (USD) Soars on US Treasury Yields and Safe-Haven Demand
The US Dollar (USD) continued its bullish run yesterday as global risk-off trade fuelled safe-haven demand and USD rose in line with US Treasury yields.
As well as worries over slowing Chinese and European growth, the US potentially reaching its debt ceiling on 18th October added to the drop in risk appetite and drove investors to the safe-haven currency.
Unless market sentiment improves or the Federal Reserve changes its tapering stance, the US Dollar will likely continue making gains today.
Canadian Dollar (CAD) Strengthens as WTI Crude Holds $75 a Barrel
The Canadian Dollar (CAD) ticked higher against many major currencies but slipped against the US Dollar on Wednesday.
WTI crude prices held above $75 a barrel amid cautious market trade to help support the oil-sensitive ‘Loonie’.
New Zealand Dollar (NZD) Slips in Risk-off Trade
The risk-sensitive New Zealand Dollar (NZD) fell across the board as market risk aversion dominated trade and fuelled demand for safe-haven currencies.
Global economy slowdown fears and lingering concerns about the debt of Chinese property developer Evergrande triggering an equity market selloff continued weighing on NZD.
The ‘Kiwi’ could stem its losses today if market mood improves, although global economic worries look set to remain.
Data Releases
Sep 30th 10:00 NZD ANZ Business Confidence (Sep) -7
Sep 30th 11:45 AUD China Manufacturing PMI (Sep) 49.5
Sep 30th 16:00 GBP GDP (Q2) 4.8%
Sep 30th 17:55 EUR German Unemployment Rate (Sep) 5.4%
Sep 30th 22:00 EUR German Inflation (Sep) 4.2%
Sep 30th 22:430 USD GDP (Q2) 6.6%