Australian dollar (AUD) fluctuates amid Chinese inflation figures
The Australian dollar (AUD) initially firmed yesterday, hitting a near four-month high against the US dollar (USD), after fresh data revealed that Chinese inflation rose in August, helping to ease concerns over deflationary pressures in Australia’s largest trading partner.
However, AUD faced volatility later in the session as a souring mood and profit-taking undermined the risk-sensitive currency.
Turning to today, an expected rise in Australian consumer inflation expectations in September could underpin the ‘Aussie’ by reinforcing Reserve Bank of Australia (RBA) interest rate hike bets.
New Zealand dollar (NZD) touches one-week low amid risk-off mood
The New Zealand dollar (NZD) slipped to a one-week low against many of its peers yesterday as a risk-off mood prevailed. However, the currency managed to bounce off its worst levels.
Domestic data is thin on the ground for NZD today, likely leaving the ‘kiwi’ to trade on global risk dynamics once again.
Pound (GBP) choppy amid ongoing data drought
The pound (GBP) lacked a clear direction yesterday as British economic data remained thin on the ground.
This left Sterling to trade in a wide range, with GBP also exposed to market turbulence.
Sterling may remain mixed today as the recent UK data drought continues, with GBP investors potentially hesitant to place bets ahead of tomorrow’s GDP figures.
Euro (EUR) boosted by softer USD
The euro (EUR) ticked higher yesterday, with EUR seemingly drawing support from its strong negative correlation with the softening US dollar.
However, the looming European Central Bank (ECB) interest rate decision – which will be announced today – limited the single currency’s movement.
With a quarter-point rate hike fully priced in, the ECB’s forward guidance may be the focus for EUR investors today. While markets expect a hawkish tone, this means the euro could be poised to fall if the bank sounds more dovish than anticipated.
US dollar (USD) struggles despite risk aversion
The US dollar was subdued yesterday as a risk-off market mood failed to provide USD with safe-haven flows.
The downside came amid a range of wider economic and technical factors, including the US-Iran war, trade tensions with Canada and the strength of the Japanese yen (JPY).
Looking ahead, the latest US producer price index is due out today. A rise in producer prices in August could support USD, although gains may be limited ahead of tomorrow’s more impactful inflation data.
Canadian dollar (CAD) slides as trade war escalates
The crude-linked Canadian dollar (CAD) fell yesterday, despite stronger oil prices, as the US escalated its trade war with Canada by banning certain Canadian goods.
Commodity markets and trade tensions could continue driving CAD exchange rates today. While higher crude prices could support the ‘loonie’, the intensifying trade war may pressure the currency.
Data releases
11:00 AUD Consumer Inflation Expectations (Sep)
22:15 EUR ECB Interest Rate Decision
22:30 USD PPI (Aug)