Australian Dollar (AUD) Firms as Market Mood Improves
The Australian Dollar (AUD) rose against its peers yesterday as an upbeat market mood supported the risk-sensitive currency.
Also buoying the ‘Aussie’ were hawkish comments from Chinese officials: the Politburo said that they will keep economic operations within a reasonable range in 2022.
Looking ahead, policymakers are expected to leave the Reserve Bank of Australia (RBA)’s interest rate unchanged this afternoon – any dovish comments may exert AUD downside.
Pound (GBP) Supported by Construction PMI
The Pound (GBP) climbed on Monday as the UK’s November construction PMI rose to 55.5, demonstrating a robust and accelerated expansion of construction activity.
Adding to GBP upside, comments from Bank of England (BoE) policymaker Ben Broadbent were unexpectedly hawkish: the deputy governor suggested that Britain’s tight labour market is likely to be a more persistent source of inflation, re-focusing attention on the possibly of rate hikes.
Into today, data from the British Retail Consortium (BRC) is expected to reveal a rise on last year’s November sales, potentially buoying Sterling.
Euro (EUR) Trades Mixed on Weak Data
The Euro (EUR) sank yesterday against several peers as both German factory orders and Germany’s construction PMI printed lower than expected.
A risk-on market mood – while uplifting riskier currencies for the most part – is exerting further pressure on EUR amid rising expectations of faster tapering from the US Federal Reserve. Support for USD tends to suppress Euro sentiment due to the currencies’ strong negative correlation.
A mixed clutch of data could subdue Euro trading today – German industrial production is expected to improve with Eurozone GDP, while ZEW economic sentiment is set to fall.
US Dollar (USD) Wavers Amidst Risk-On Headwinds, Hawkish Fed Comments
The US Dollar (USD) fluctuated through Monday’s session as high risk appetite exerted downside pressure while simultaneously encouraging bets of imminent policy tightening from the Fed.
Hawkish comments from the Fed’s Chairman Jerome Powell, Randal Quarles and Loretta Mester last week seem to support the theory of more aggressive tightening monetary policy soon.
A narrowing trade deficit may bolster USD sentiment today amidst a lack of additional trading impetus.
Canadian Dollar (CAD) Strengthens as Crude Prices Rise
The Canadian Dollar (CAD) gained yesterday as oil prices rallied on waning Covid concerns. An article from the South African Medical Research Council suggested that Omicron symptoms were milder than those of other variants.
Today’s balance of trade may influence the ‘Loonie’, alongside Canada’s Ivey PMI. The latter is expected to reveal a slowdown, potentially subduing CAD.
New Zealand Dollar (NZD) Gains Overall on Chinese Data, AUD Tailwinds
The New Zealand Dollar (NZD) was supported against the majority of its peers on Monday as risk-on trading buoyed the currency along with ‘Aussie’ strength and upbeat Chinese data.
Data Releases
Dec 7th 10:01 GBP BRC Retail Sales Monitor (Nov) 1.1%
Dec 7th 13:30 AUD RBA Interest Rate Decision 0.1%
Dec 7th 17:00 EUR German Industrial Production (Oct) 0.8%
Dec 7th 20:00 EUR GDP Growth Rate Q3 (3rd est.) 2.2%
Dec 7th 20:00 EUR ZEW Economic Sentiment Index (Dec) 23.2
Dec 7th 20:00 EUR German ZEW Economic Sentiment Index (Dec) 25.1
Dec 7th 23:30 CAD Balance of Trade (Oct) C$2bn
Dec 7th 23:30 USD Balance of Trade (Oct) $-66.8bn
Dec 8th 01:00 CAD Ivey PMI s.a. Nov 58.7
Dec 8th 01:00 USD IBD/TIPP Economic Optimism (Dec) 45