Australian Dollar (AUD) Strengthens on Positive Risk Flows
The Australian Dollar (AUD) firmed through Friday’s session following the release of key US data, as markets digested mixed reports.
Weakness in the US Dollar (USD) appeared to attract some support to risk-on currencies such as the ‘Aussie’, despite a lack of domestic AU data and ongoing fears of a global recession.
Today, Australia’s finalised services PMI and retail data could influence AUD trading. If services activity fell into contraction as expected, the currency may weaken – although a rise in sales could offset headwinds.
New Zealand Dollar (NZD) Supported by AUD Strength
The New Zealand Dollar (NZD) also rose at the end of last week, buoyed by strength in its sister currency as well as risk-on sentiment.
A lack of domestic data leaves NZD to trade on external factors today. If risk sentiment remains positive, the New Zealand Dollar could extend its uptrend.
Pound (GBP) Pressured by Downbeat Forecasts
The Pound (GBP) continued to weaken against several peers on Friday, heading for a third weekly loss against the US Dollar specifically.
Denting Sterling sentiment was analysis from the British Chambers of Commerce (BCC), suggesting the economy has already entered a recession. Further predictions of business closures and falling living standards added to GBP headwinds.
Today’s finalised services PMI may lend support to the currency if it records expansion in August as expected. If the data prints below forecasts, however, GBP is likely to fall.
Euro (EUR) Buoyed by ECB Bets, PPI Data
The Euro (EUR) climbed at the end of last week as expectations for a 75bps interest rate hike from the European Central Bank (ECB) next week capped energy-price-inspired losses.
Germany’s trade balance printed below expectations early in the European session but also failed to exert significant pressure upon the Euro, as producer price inflation in the bloc hit 4% in July and 37.9% on an annualised basis – both above forecast.
As in the UK and elsewhere, finalised PMI data may affect EUR trading today. Additionally, rising retail sales could buoy the Euro following last month’s contraction.
US Dollar (USD) Sinks in Response to Mixed Jobs Report
The US Dollar (USD) slumped against several peers overnight following the release of August’s jobs report.
Non-farm payrolls revealed 315K new hires – above expectations although fewer than in July. Meanwhile, unemployment increased while wage growth slowed – potentially signalling that inflation is peaking.
Such an indication inspired risk-on trading, improving market sentiment while weighing upon the ‘Greenback’. Easing inflationary pressures mean less impetus for the Federal Reserve to hike interest rates so aggressively.
A lack of data leaves USD to trade on external factors today. Persistent fears of a recession could inspire risk-off trading, attracting safe-haven support to the US Dollar.
Canadian Dollar (CAD) Wavers on Oil Uncertainty
The Canadian Dollar (CAD) made some gains on Friday as oil prices rose. Russia warned it would stop selling oil to countries imposing a price cap – a measure supported by G7 nations to cap Russian profits.
Prices are not expected to rise much further, however, as OPEC+ considers oil demand to be falling.
Data Releases
Sep 5th 09:00 AUD S&P Global Services PMI Final (Aug) 49.6
Sep 5th 11:30 AUD Retail Sales Final (Jul) 1.3%
Sep 5th 17:55 EUR German S&P Global Services PMI Final (Aug) 48.2
Sep 5th 18:00 EUR S&P Global Services PMI Final (Aug) 50.2
Sep 5th 18:30 GBP S&P Global/CIPS Services PMI Final (Aug) 52.5
Sep 5th 19:00 EUR Retail Sales (Jul) 0.4%