Australian Dollar (AUD) Clipped by Dovish RBA Minutes
Cautious minutes from the Reserve Bank of Australia’s (RBA) most recent meeting tempered the Australian Dollar (AUD) yesterday.
The minutes showed the RBA nearly hiked rates, but opted to monitor how its tightening cycle was feeding through into the economy. As such, the risk-sensitive ‘Aussie’ was unable to fully capitalise on the session’s tentative optimism.
The ‘Aussie’ may fail to gain much traction today, due to an absence of impactful releases.
New Zealand Dollar (NZD) Gains Ground amid Risk-On Trade
Yesterday, the risk-sensitive New Zealand Dollar (NZD) strengthened amid an improving market mood.
However, a scarcity of macroeconomic releases served to NZD’s gains over the course of the session.
Today, risk appetite could continue to drive the ‘Kiwi’. Will a cautious mood ahead of the Federal Reserve decision see NZD trade sideways?
Pound (GBP) Capped by Light Data Calendar
Due to a short supply of data, the Pound (GBP) traded without a clear direction yesterday.
Additionally, further pressure likely came from continually diminishing Bank of England (BoE) tightening bets.
This afternoon, the UK consumer price index is due to release. Signs of persistently sticky UK inflation could rejuvenate BoE bets, thereby potentially lifting the Pound.
Euro (EUR) Undermined by Downward Inflation Revision
The Eurozone’s final inflation print for August came in below preliminary readings yesterday, which weighed on the Euro (EUR).
By signalling a downward trend in inflation, the CPI prompted a pullback in European Central Bank (ECB) rate hike bets, creating headwinds for the Euro.
Amid a flurry of ECB speakers today, a speech from policymaker Isabel Schnabel could be the most impactful. Known as a hawk, Schnabel has sounded more cautious in recent weeks. Could dovish comments dent EUR?
US Dollar (USD) Wobbles amid Cheery Market Mood
Wavering trade struck the safe-haven US Dollar (USD) yesterday, as a risk-on impulse characterised the session.
Additionally, investors seemed unwilling to meaningfully support the ‘Greenback’ ahead of tomorrow morning’s interest rate decision from the Federal Reserve.
Markets expect the Fed to hold interest rates steady, with the focus on the bank’s forward guidance. Any indication that the Fed is done raising rates could weigh on the ‘Greenback’.
Canadian Dollar (CAD) Rallies on Red Hot Inflation
Following a larger-than-forecast rise in Canadian inflation yesterday, the Canadian Dollar (CAD) strengthened against most major peers as markets bet on more action from the Bank of Canada (BoC).
The ‘Loonie’ could carry this momentum forward today, while oil prices could also impact the commodity-linked currency.
Data Releases
Sep 20th 08:45 NZD Current Account (Q2) NZ$-4.8bn
Sep 20th 16:00 GBP Inflation Rate (Aug) 7%
Sep 20th 19:00 EUR ECB Schnabel Speech
Sep 21st 04:00 USD Fed Interest Rate Decision 5.5%