Australian Dollar (AUD) Climbs Ahead of RBA Interest Rate Decision
The Australian Dollar (AUD) made strong gains yesterday due to a risk-on impulse.
The gains came despite a sharp drop in iron ore prices. The commodity fell by around 3% amid a downturn in the Chinese industrial sector.
Today’s interest rate decision from the Reserve Bank of Australia’s (RBA) has largely been priced in by markets. Will a cautious tone from RBA Governor Philip Lowe’s see the currency fall?
New Zealand Dollar (NZD) Bolstered by Hawkish RBNZ Rate Hike Bets
The New Zealand Dollar (NZD) climbed on Monday. The ‘Kiwi’ was boosted by bets on a hawkish rate hike from the Reserve Bank of New Zealand (RBNZ) at their Wednesday meeting.
NZD’s movement today is set to be driven by further rate hike bets and risk appetite.
Pound (GBP) Firms after Government Tax U-Turn
The Pound (GBP) rose against many of its rivals yesterday. The UK government’s U-turn on its plan to abolish the 45% top rate of income tax provided a boost to confidence in the currency.
Many economists signalled that the move would do little to improve the UK’s long-term outlook, capping gains for Sterling.
With no significant data for GBP today, the currency could be affected by comments from PM Liz Truss and Chancellor Kwasi Kwarteng.
Euro (EUR) Tumbles as Ukrainian Forces make Further Gains
The Euro (EUR) slumped against its rivals yesterday. The single currency struggled amid a return of risk appetite and further escalation in the Russia-Ukraine conflict.
The final reading of September’s manufacturing PMI for the Eurozone also weighed on EUR as output was revised lower that forecast. The data added to fears of a recession in the trading bloc.
Looking ahead, a speech from European Central Bank (ECB) President Christine Lagarde could push EUR higher if she commits to further interest rate hikes.
US Dollar (USD) Falls as Manufacturing Output Slumps
The US Dollar (USD) dropped on Monday amid a risk-on trading sentiment. A drop in manufacturing output in September also weighed on the ‘Greenback’.
USD continued to see major losses limited by Federal Reserve rate hike bets, however. Markets are currently pricing in a 0.75% rate hike from the central bank.
A forecast decline in August’s job openings could weigh on USD exchange rates later tonight if it dents Fed rate hike bets.
Canadian Dollar (CAD) Leaps amid Oil Price Rally
The Canadian Dollar (CAD) soared on Monday as oil prices rose by nearly 5%. The commodity’s rise came amid reports that the OPEC+ group is considering a drastic cut in crude oil output.
Looking ahead, in the absence of any notable CAD data today, any movement in the ‘Loonie’ is likely to remain tied to oil price dynamics.
Data Releases
Oct 4th 07:30 AUD Ai Group Manufacturing Index
Oct 4th 13:30 AUD RBA Interest Rate Decision 85%
Oct 4th 19:00 EUR PPI (Aug) 9%
Oct 5th 00:00 USD JOLTs Job Openings (Aug) 775m
Oct 5th 00:00 USD Factory Orders (Aug) 0%
Oct 5th 01:00 EUR ECB Lagarde Speech