Australian dollar (AUD) undermined by weaker-than-forecast inflation expectations
The Australian dollar (AUD) ticked lower during yesterday’s Asian trading session as domestic consumer inflation expectations for September were softer than forecast.
These losses then accelerated in overnight trade as geopolitical uncertainty and a stronger US dollar (USD) stoked market risk aversion.
In the absence of any notable Australian economic indicators, AUD movement will likely be tied to market risk dynamics today. This could expose further weakness in the ‘Aussie’ if sentiment weakens following the latest US inflation figures.
New Zealand dollar (NZD) buoyed by dip-buying
The New Zealand dollar (NZD) attracted some fleeting support on Thursday as the currency’s recent losses made it more attractive to price-conscious investors.
Coming up, New Zealand’s latest manufacturing PMI could drag on the ‘kiwi’ this morning if it reports that domestic factory activity continued to cool last month.
Pound (GBP) sidelined ahead of GDP data
The pound (GBP) was left largely rangebound yesterday as the continued lull in UK economic releases left the currency without clear impetus.
GBP investors were also reluctant to alter their positions in Sterling ahead of the release of only key domestic data of the week, the UK’s latest GDP print.
Said GDP data poses a potential risk to the pound today, as month-on-month growth is forecast to have stagnated in July.
Euro (EUR) muted as ECB rate hike disappoints hawks
The euro (EUR) traded sideways on Thursday as the European Central Bank (ECB) delivered its latest interest rate decision.
With the ECB’s 25bps rate hike fully priced in ahead of the meeting, the focus was on the bank’s guidance. This led EUR to falter as the ECB’s policy statement and accompanying comments from ECB President Christine Lagarde failed to meet the more hawkish expectations of EUR investors.
Turning to today’s session, Lagarde is scheduled to speak again later in the session, but barring her striking a decidedly more hawkish note, their impact on EUR may be limited.
US dollar (USD) jumps as producer inflation accelerates
The US dollar enjoyed broad support on Thursday, initially firming as fresh energy price uncertainty bolstered demand for safe-haven assets.
The ‘greenback’ then consolidated these gains with the release of the latest US producer price index, where a 0.4% acceleration in factory-gate prices last month bolstered expectations for today’s consumer inflation report.
If August’s consumer price index points to a similar lift in inflationary pressures for households, it’s likely to extend additional support to the US dollar as it consolidates bets that the Federal Reserve will hike interest rates next week.
Canadian dollar (CAD) firms as oil strikes $105
The Canadian dollar (CAD) appreciated yesterday, with surging oil prices helping the commodity-linked currency to shake off US-Canadian trade war jitters.
The trajectory of the ‘loonie’ is likely to continue to reflect movement in oil prices today, with CAD exchange rates likely to remain supported so long as Brent crude continues to climb.
Data Releases
08:30 NZD Manufacturing PMI (Aug)
16:00 GBP GDP (Jul)
22:30 USD Inflation Rate (Aug)