Australian Dollar (AUD) Trends Higher as Foreign Travel Announced
The risk-sensitive Australian Dollar (AUD) made gains at the end of last week, after an improvement in risk appetite and optimism grew over the news that Australian borders reopening for travel in November.
Foreign travel will be open to Australians who are vaccinated and from states with an 80% vaccination rate for the first time since March 2020, boosting hopes of economic recovery.
Ahead of tomorrow’s high-impact Reserve Bank of Australia (RBA) interest rate decision, business confidence index and services PMI, AUD exchange rates may remain sensitive to risk appetite.
Pound (GBP) Rallies after Week’s Selloff
The Pound (GBP) began to recover some of the week’s losses on Friday, as investor concerns over UK fuel shortages appeared to ease.
Finalised UK manufacturing PMI data supported the Pound earlier in the session. Growth in the sector slowed to its slowest rate since February, but the reading beat expectations at 57.1, instead of 56.3, despite recent supply chain issues and businesses facing rising prices.
Looking ahead, UK economic outlook doubts will likely continue stoking volatility in GBP, while services PMI data tomorrow looks set to remain in expansion, potentially supporting Sterling.
Euro (EUR) Mixed amid Weaker USD
The Euro (EUR) received some support at the end of the week due to its negative correlation with a weakening US Dollar.
However, the single currency struggled for momentum after German retail sales missed forecast, Eurozone manufacturing PMI showed growth hit a 7-month low, and inflation in the bloc rose more-than-expected to 3.4%.
More significant data releases will drive movement in the Euro this week, with Eurozone finalised September services PMIs and August’s retail sales, and German factory orders and industrial production for August.
US Dollar (USD) Relinquishes Gains as Market Mood Improves
The US Dollar (USD) slipped at the end of last week’s trading as an improvement in risk appetite weighed on safe-haven demand for the ‘Greenback’.
After the US PCE index, the Fed’s preferred measure of inflation, came in just above forecast, and the ISM manufacturing PMI exceeded expectations, market sentiment picked up and drove safe-haven USD lower.
Risk appetite will likely drive the US Dollar today ahead the ISM non-manufacturing PMI midweek, and the influential jobs report on Friday.
Canadian Dollar (CAD) Dented as GDP Contracts
The Canadian Dollar (CAD) ended the week on the back foot after July’s GDP reading revealed a -0.1% contraction and the manufacturing PMI indicated growth slowed slightly, albeit slightly higher than forecast.
The oil sensitive ‘Loonie’ may experience some volatility this week with global price pressures potentially causing oil prices to fluctuate and Canadian trade figures, Ivey PMI and unemployment rate data released this week.
New Zealand Dollar (NZD) Boosted by Upbeat Trade
The risk-sensitive New Zealand Dollar (NZD) received a boost in upbeat start of month trade, with risk appetite likely driving movement ahead of the Reserve Bank of New Zealand’s (RBNZ) interest rate decision.
With the central bank set to raise interest rates to 0.5% from 0.25%, the ‘Kiwi’ could make some gains in midweek.
Data Releases
5th Oct USD Factory Orders (Aug) 0.9%
5th Oct AUD Services PMI (Sep) 44.9
5th Oct AUD NAB Business Confidence (Sep)
5th Oct AUD RBA Rate Decision 0.1%