Australian Dollar (AUD) Trends Up as Risk Sentiment Recovers
The Australian Dollar (AUD) climbed on Monday as markets embraced a risk-on mood.
Investors considered that Friday’s reaction to the ‘Omicron’ Covid variant was disproportionate, leading to a positive turnaround in risk sentiment. AUD was also supported by the release of company profits in the third quarter, which grew by 4%.
As a proxy for the Chinese economy, the Australian Dollar may face pressure today if China’s non-manufacturing and general PMIs reveal a decline in growth as expected.
Pound (GBP) Slips despite Upbeat Data
The Pound (GBP) fell at the beginning of the week, as headwinds over Brexit uncertainty exerted downside.
Sterling saw some brief gains as consumer credit data printed above expectations. However, GBP upside was tempered by Covid concerns and lack of a resolution over the Northern Ireland protocol.
Looking ahead, a lack of significant UK data means GBP will likely be driven by Covid variant developments and Bank of England (BoE) rate hike speculation.
Euro (EUR) Pressured by Weak Data, US Dollar Strength
The Euro (EUR) sank yesterday due to higher-than-expected German inflation, as well as Eurozone consumer confidence and economic sentiment waning.
A risk-on mood also supported US Treasury bonds, in turn buoying the US Dollar (USD) and applying EUR downside. Dovish comments from two European Central Bank (ECB) officials weighed further upon the single currency.
Looking ahead, Eurozone inflation released this evening will likely drive additional EUR movement.
US Dollar (USD) Buoyed by Rising Bond Yields
The US Dollar found support on Monday as Treasury bond yields increased.
Also supporting the ‘Greenback’ was the Federal Reserve’s increasingly hawkish monetary policy stance. Atlanta Fed President Raphael Bostic remarked over the weekend that he could support a faster quantitative easing taper and more than one 2022 rate hike.
Various Fed speeches and one from Treasury Secretary Janet Yellen are likely to influence USD exchange rates today, with further hawkish comments likely to lend upside.
Canadian Dollar (CAD) Bolstered by Oil Price Rise
The Canadian Dollar (CAD) strengthened at the beginning of the week as Friday’s oil-price losses were reversed. Given widespread fear over the Omicron variant, investors worried that demand for fuel may drop.
However, oil prices improved by more than $4 per barrel On Monday, supporting CAD despite a lower-than-expected current account surplus.
The ‘Loonie’ is likely to climb today on an improving GDP growth rate for the third quarter.
New Zealand Dollar (NZD) Weakens on RBNZ Fallout
The New Zealand Dollar (NZD) continued to fall yesterday as investors sold NZD over the decision of the Reserve Bank of New Zealand (RBNZ) to delay aggressively raising interest rates.
The risk-sensitive currency was dented last week as the new Covid variant drew support towards safe-haven assets; even more so as the ‘Kiwi’ had been enjoying a bullish run.
Data Releases
Nov 30th 12:00 AUD RBA Debelle Speech N/A
Nov 30th 18:55 EUR German Unemployment Rate (Nov) 5.3%
Nov 30th 20:00 EUR Eurozone Inflation Rate Flash (Nov) 4.5%
Nov 30th 23:30 CAD GDP Growth Rate (Q3) 0.5%
Dec 1st 00:45 USD Chicago PMI (Nov) 67
Dec 1st 01:00 USD Fed Chair Powell Testimony N/A
Dec 1st 01:00 USD CB Consumer Confidence (Nov) 110.9
Dec 1st 01:00 USD Treasury Secretary Yellen Speech N/A
Dec 1st 01:30 USD Fed Williams Speech N/A
Dec 1st 04:00 USD Fed Clarida Speech N/A
Dec 1st 07:30 AU Ai Group Manufacturing Index (Nov) 51.4