Australian Dollar (AUD) Undermined by Downbeat Mood
The Australian Dollar (AUD) slumped through Wednesday’s trading session, the risk-sensitive currency struggling to attract support as market risk appetite waned.
This offset the publication of Australia’s slightly stronger-than-expected services PMI.
Coming up, the ‘Aussie’ could look to mount a recovery later this morning with the publication of Australia’s latest trade figures. Will an expected widening of Australia’s trade surplus reflect positively on AUD exchange rates?
New Zealand Dollar (NZD) Strengthens Following RBNZ Rate Decision
The New Zealand Dollar (NZD) enjoyed robust support yesterday as the Reserve Bank of New Zealand delivered its latest interest rate decision.
The RBNZ raised interest rates by another 50bps as expected, with the ‘Kiwi’ strengthening as the bank also signalled that it will continue to hike rates.
In the absence of any notable NZ data, movement in NZD exchange rates today is likely to be tied to market risk appetite.
Pound (GBP) Retreats Following Truss Speech
The Pound (GBP) slumped against most of its peers overnight on Wednesday, following a speech by UK Prime Minister Liz Truss.
Despite her claims that her government will keep an ‘iron grip’ on UK finances, markets appeared unimpressed after the chaos caused by Chancellor Kwasi Kwarteng’s mini-budget.
Looking ahead, investors are likely to remain wary of the Pound amid ongoing fiscal uncertainty and speculation that Truss’s time in office could prove short lived.
Euro (EUR) Weakens as PMIs Stoke Recession Concerns
The Euro (EUR) trended lower during yesterday’s European session. The single currency being undermined after the Eurozone’s services PMI was revised lower, reviving Eurozone recession fears.
The single currency’s negative correlation with the US Dollar extended these losses amid a strong uptick in the latter.
Turning to today’s session the Euro could face additional headwinds as Germany’s latest factory orders release is expected to report another contraction in order growth in August.
US Dollar (USD) Surges amid Gloomy Market Mood
The US Dollar roared higher on Wednesday, with the ‘Greenback’s initial gains coming as investors flocked to the safe-haven currency amid a risk-off mood.
Reinforcing these gains was the publication of the latest ISM manufacturing PMI. Which reported a larger-than-expected expansion in US service sector activity last month.
With notable US data thin on the ground today, the US Dollar is likely to remain sensitive to market sentiment. Another drop in risk appetite could propel USD exchange rates higher.
Canadian Dollar (CAD) Mixed as Oil Prices Fluctuate
The Canadian Dollar (CAD) wavered overnight. The oil sensitive currency initially rising in tandem with crude prices, before oil prices began to retreat again in spite of OPEC’s production cuts.
The release of Canada’s latest Ivey PMI could drag on the ‘Loonie’ later tonight, if September’s index reports a slowing of business activity.
Data Releases
Oct 6th 10:30 AUD Balance of Trade (Aug) AU$10.1bn
Oct 6th 16:00 EUR German Factory Orders (Aug) -0.7%
Oct 6th 19:00 EUR Retail Sales (Aug) -0.4%
Oct 7th 00:00 CAD Ivey PMI (Sep) 55