Australian dollar (AUD) bolstered by improving risk demand
The Australian dollar (AUD) ticked higher through the start of this week’s session as falling oil prices cheered investors and revived market risk appetite.
The upside in AUD was also reinforced by hawkish Reserve Bank of Australia (RBA) interest rate hike expectations, which continue to build ahead of next week’s meeting.
Australian data is in short supply today, which is likely to see market risk dynamics continue to act as a key catalyst for the ‘Aussie’.
New Zealand dollar (NZD) buoyed by risk-on flows
The New Zealand dollar (NZD) also firmed on Monday amid the modest upswing in market risk sentiment.
In the absence of any notable domestic data, expect movement in the ‘kiwi’ to continue to be driven by risk trends today.
Pound (GBP) muted as consumer confidence weakens
The pound (GBP) was subdued through yesterday’s session as data showed UK consumer confidence fell to a three-year low this month.
The S&P Global consumer sentiment index fell to just 42.7 in September as households grow increasingly concerned about the prospect of rising interest rates and potential tax hikes.
Coming up, the latest UK government borrowing figures could deliver another blow to Sterling today if a larger-than-expected public deficit further limits the fiscal headroom available for the upcoming budget.
Euro (EUR) subdued as ‘disastrous’ German election rattles markets
The euro (EUR) faced modest headwinds on Monday after Germany’s regional elections proved a ‘disaster’ for the ruling CDU government.
The results raised fresh questions over Chancellor Friedrich Merz’s future as well as whether the government has the political capital to push through its economic reforms.
The Eurozone will release its latest consumer confidence figures later today, with the euro poised to weaken if sentiment deteriorated again this month.
US dollar (USD) losses capped by Fed bets
Quiet trade and an improvement in risk appetite left the US dollar (USD) muted at the start of this week.
However, the selling pressure remained modest amid the hawkish repositioning that followed the Federal Reserve’s interest rate decision last week.
Looking ahead, the latest ADP employment data may lift USD exchange rates later today if employment growth maintained a positive trajectory at the start of September.
Canadian dollar (CAD) dented by sliding oil prices
The Canadian dollar (CAD) edged lower on Monday as the commodity-linked currency was undermined by the pullback in oil prices.
The ‘loonie’ is likely to extend its losses today if this downtrend in oil prices persists and Brent falls back below $100 a barrel.
Data releases
16:00 GBP Public Sector Borrowing (Aug)
22:15 USD ADP Employment Change Weekly
00:00 EUR Consumer Confidence (Sep)