Australian Dollar (AUD) Mixed on Risk-Off Mood
The Australian Dollar (AUD) fell against several peers yesterday as a risk-off market mood deterred investors. Soaring energy prices across Europe contributed towards bearish trading, as a rise in the cost of natural gas was countered by an increase in oil prices.
Chinese headwinds also weighed upon the ‘Aussie’, as
Military tensions between China and Taiwan also weighed on market mood. Relations are reportedly at their worst in more than forty years, following an incursion of fifty-two Chinese aeroplanes into Taiwan’s Air Defence Identification Zone (ADIZ).
Looking ahead, tomorrow’s financial stability review may have some effect on the Australian Dollar, although AUD will more likely be swayed by risk sentiment. As Europe’s energy crisis goes unresolved, the ‘Aussie’ will likely face further headwinds.
Pound (GBP) Struggles as Fuel Crisis Weighs Upon Market Mood
The Pound (GBP) lost support through yesterday’s session, as oil demand outpaces supply and fuel costs close in on an all-time high, nearing the record set in April 2012 of 142.48 pence per litre.
In addition, two in three UK firms are expecting to raise prices of consumer goods in the run up to Christmas, with affected retailers including fast-food chain Greggs and luxury chocolatier Hotel Chocolat. Mounting cost pressures are forcing prices up, alongside a shortage of drivers and other staff.
A lack of significant data through today’s session means Pound dynamics will likely be influenced by ongoing economic concerns, as well as general risk sentiment.
Euro (EUR) Slumps as German Data Disappoints
The Euro (EUR) came under pressure on Wednesday as German factory orders printed lower than expected, contracting by -7.7% for the month of August. Supply bottlenecks and shortages hit factories in Europe’s largest economy.
Risk-off trade and subsequent US Dollar (USD) strength also subdued EUR trading, as a result of the strong negative correlation between the Euro and the ‘Greenback’.
A speech from the European Central Bank board member Isabel Schnabel today may influence Euro sentiment going forwards – if Schnabel strikes a hawkish tone, the Euro may enjoy tailwinds.
US Dollar (USD) Rises on Risk Aversion
The US Dollar (USD) climbed yesterday as widespread risk aversion drew investors towards the safe-haven currency. Tensions in China, combined with energy price hikes and inflationary pressures contributed towards bearish trading.
In addition, US 10-year treasury yields rose, reaching their highest level since June, and ADP employment figures for the month of September rose more than expected, boosting USD sentiment.
Further employment data in today’s session may lend additional support to the ‘Greenback’, as initial jobless claims are predicted to fall on last month.
Canadian Dollar (CAD) Firms on Upbeat Oil Forecasts
The Canadian Dollar (CAD) extended its rally yesterday as oil prices approached $79 per barrel, before pausing on a five-day uptrend.
Tomorrow’s Ivey PMI may influence CAD trading looking forwards, a slight fall in business conditions potentially exerting downside pressure.
New Zealand Dollar (NZD) Tumbles on Interest Rate Rise
The New Zealand Dollar (NZD) fell yesterday as an interest rate decision from the Reserve Bank of New Zealand sparked unease amongst investors.
While the move was expected, the central bank’s cash rate increase draws attention to alarming inflation levels and a red-hot housing market.
Also denting ‘Kiwi’ sentiment, the New Zealand government has backtracked on its Covid elimination strategy, against experts’ recommendations.
Data Releases
Oct 7th 07:30 AUD Ai Group Services Index (Sep) 49.8
Oct 7th 16:00 EUR German Industrial Production (Aug) -0.4%
Oct 7th 22:30 USD Initial Jobless Claims (Oct) 348K
Oct 7th 23:00 EUR ECB Schnabel Speech N/A
Oct 8th 00:00 CAD Ivey PMI s.a. (Sep) 64.2
Oct 8th 01:45 EUR ECB Lane Speech N/A
Oct 8th 02:00 CAD BoC Gov Macklem Speech N/A