Australian dollar (AUD) rallies as risk appetite jumps
The Australian dollar (AUD) initially traded with modest support on Friday, as it was buoyed by robust Chinese trade figures.
These gains then accelerated later in the session as widespread weakness in the US dollar (USD) bolstered market risk appetite.
Turning to the start of this week, the Australian dollar faces potential headwinds after data released on Sunday reported another softening of inflation in China.
New Zealand dollar (NZD) firms amid positive shift in risk sentiment
The New Zealand dollar (NZD) fluctuated at the end of last week but ultimately closed the session higher amid the later recovery in risk appetite.
Expect movement in the ‘kiwi’ to remain linked to market risk dynamics at the start of this week, with the potential for the ‘kiwi’ to appreciate if sentiment continues to improve.
Pound (GBP) struggles amid continued lull in data
The pound (GBP) was left adrift through the end of last week, in the continued absence of any notable UK economic indicators.
While falling UK borrowing costs offered some support, it was not enough to allow Sterling to offset the strength of some of its peers.
UK economic data remains in short supply through the first half of this week, which may continue to limit liquidity in Sterling.
Euro (EUR) underpinned by USD weakness
The euro (EUR) was bolstered by its strong negative correlation with the US dollar on Friday.
However, these gains remained modest in scope as the single currency was simultaneously suppressed by the pullback in safe-haven demand.
In the absence of any notable Eurozone data, the euro may trade without strong directional bias at the start of this week.
US dollar (USD) plummets on payroll disappointment
The US dollar closed last week’s session on a particularly sour note as the latest non-farm payroll figures reported a shock contraction in the US labour market last month.
USD exchange rates tested new multi-month lows as the data saw investors price out a potential interest rate hike from the Federal Reserve next month.
Turning to the start of this week, the US dollar may remain on the defensive as investors continue to adjust their positions in the currency following Friday’s exceptionally poor data.
Canadian dollar (CAD) strengthens as unemployment falls
The Canadian dollar (CAD) firmed on Friday, supported by a surprisingly upbeat jobs report that showed domestic unemployment fell to a two-year low in July.
Looking ahead, the ‘loonie’ may face headwinds at the start of this week if renewed hopes for a US-Iran ceasefire agreement suppresses oil prices.