Australian Dollar (AUD) Drops on RBA’s Dovish Tilt
The Australian Dollar (AUD) fell on Wednesday following dovish comments from Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock, who said that Australian inflation may have peaked.
The risk-sensitive ‘Aussie’ was also pushed lower by a slip in China’s inflation figures and a downbeat market mood. An uptick in iron ore prices helped to limit losses for AUD, however.
A drop in Australian consumer inflation expectations could pull AUD lower this morning, as it may see investors pare back bets for further RBA interest rate hikes.
New Zealand Dollar (NZD) Pulled Lower by Retreat in Risk Appetite
The risk-sensitive New Zealand Dollar (NZD) tumbled yesterday amid a risk-off mood, as fears of slowing growth in China and further interest rate hikes in the US weighed on markets.
The ‘Kiwi’ was also pulled lower by its correlation to the Australian Dollar.
With no New Zealand data out today, NZD is likely to be affected by any shifts in risk appetite.
Pound (GBP) Falls as UK’s Outlook Worsens
The Pound (GBP) tumbled yesterday as the Bank of England’s (BoE) downbeat outlook for the economy continued to weigh on Sterling.
Warning signs for the UK’s retail sector also contributed to GBP’s losses. UK retail giant Marks & Spencer reported a 24% drop in profits over the past year, while other large firms also warned of economic troubles.
Looking ahead, a speech from BoE board member Silvana Tenreyro could push Sterling lower tonight. As one of the most dovish policymakers at the bank, she may advocate slowing the pace of rate rises.
Euro (EUR) Bolstered by ECB Rate Hike Bets
The Euro (EUR) firmed on Wednesday amid a retreat in global risk appetite. Hawkish comments from European Central Bank (ECB) officials also lent support to the single currency.
However, fears of an imminent Eurozone recession capped gains for EUR, as did concerns about the ongoing Russian invasion of Ukraine.
With no significant data due out today, the Euro could be influenced by its negative correlation to the US Dollar and news from Ukraine.
US Dollar (USD) Boosted by Fed Rate Hike Bets
The US Dollar (USD) made strong gains on Wednesday as the safe-haven ‘Greenback’ benefitted from a risk-off market mood.
Market bets on further interest rate hikes from the Federal Reserve also lent support to USD, while the incoming US midterm election results triggered some volatility.
Looking ahead, an expected decline in US inflation could dampen Fed rate rise bets. Such a result would likely weigh heavily on USD.
Canadian Dollar (CAD) Pushed Higher by Rising Oil Prices
The Canadian Dollar (CAD) rose on Wednesday as rising Canadian government bond yields boosted the ‘Loonie’.
A speech from Bank of Canada (BoC) Governor Tiff Macklem may prompt movement in CAD if he gives any signals of future monetary policy. Could hawkish comments see CAD climb further?
Data Releases
Nov 10th 17:00 USD Fed Waller Speech
Nov 10th 23:10 GBP BoE Tenreyro Speech
Nov 10th 23:30 USD Inflation Rate (Oct) 8%
Nov 10th 23:30 USD Initial Jobless Claims (05/Nov) 220,000
Nov 11th 02:05 CAD BoC Gov Macklem Speech