Australian Dollar (AUD) Tumbles on Souring Market Mood
The Australian Dollar (AUD) continued to struggle for demand yesterday as a souring market mood sent the ‘Aussie’ spiralling.
Ratings agency Fitch surprised markets by downgrading the US from AAA to AA+, sparking widespread risk aversion.
Turning to today, a myriad of downbeat data could push the Australian Dollar even lower. Both the final Australian services PMI and retail sales are expected to print poorly, which could be compounded if China’s services PMI meets forecasts to show a third consecutive slowdown in growth.
New Zealand Dollar (NZD) Softens as Unemployment Ticks Higher
The New Zealand Dollar (NZD) also encountered heavy selling pressure on Wednesday after New Zealand’s jobless rate jumped to the highest level since the second quarter of 2021.
Against expectations of a modest uptick to 3.5%, the unemployment rate climbed to 3.6%. Further signs of a cooling labour market dented rate hike bets and sunk the ‘Kiwi’.
Looking ahead, with no further data out this week, the risky New Zealand Dollar could remain under pressure if the market remains anxious over global growth fears.
Pound (GBP) Quiet Ahead of Interest Rate Decision
The Pound (GBP) faced losses during yesterday’s European session as a lack of UK data left Sterling without much support.
GBP investors may also have been hesitant to bet aggressively on the Pound ahead of tonight’s Bank of England (BoE) interest rate decision.
With a 25bps hike baked in, the BoE’s forward guidance could prompt most movement. Could hints of more hikes to come help Sterling regain strong footing?
Euro (EUR) Mixed amid Lack of Data
The Euro (EUR) struggled for demand yesterday as a lack of economic data left the currency vulnerable to its negative correlation with the US Dollar (USD).
The safer Euro was able to hold strong against its riskier rivals, however, thanks to the gloomy market mood.
Turning to today, the latest Eurozone PPI figures could dent the Euro if forecasts prove accurate. An expected decline in producer prices could dampen European Central Bank (ECB) rate rise bets.
US Dollar (USD) Bolstered by Strong Jobs Growth
The safe-haven US Dollar (USD) rose to multi-week highs yesterday on the back of a souring market mood and strong labour market data.
The American private sector added 397,000 jobs in July, far surpassing an estimated 189,000 increase. This boosted bets on the possibility of another Federal Reserve rate hike.
Turning to today, a predicted uptick in jobless claims and an expected slowdown in the US service sector could pare USD’s gains.
Canadian Dollar (CAD) Buoyed by USD Strength
The crude-linked Canadian Dollar (CAD) managed to rise yesterday, despite a drop in oil prices, as the currency enjoyed its positive correlation to the US Dollar.
Looking ahead, a lack of economic data could leave the ‘Loonie’ trading on oil price dynamics. If oil prices continue to fall, it may eventually drag CAD lower.
Data Releases
Aug 3rd 09:00 AUD Judo Bank Services PMI Final (Jul) 48
Aug 3rd 11:30 AUD Balance of Trade $11bn
Aug 3rd 11:30 AUD Retail Sales MoM Final (Jun) -0.8%
Aug 3rd 18:00 EUR Services PMI Final (Jul) 51.1
Aug 3rd 18:30 GBP Global Services Final (Jul) 51.5
Aug 3rd 19:00 EUR PPI (Jun) -0.2%
Aug 3rd 21:00 GBP BoE Interest Rate Decision 5.25%
Aug 3rd 22:30 USD Initial Jobless Claims (29/Jul) 227,000
Aug 4th 00:00 USD Services PMI (Jul) 53