Australian dollar (AUD) tumbles following RBA decision
The Australian dollar (AUD) slumped yesterday following comments from Reserve Bank of Australia (RBA) Governor Michele Bullock in the wake of the bank’s decision to raise interest rates.
Bullock highlighted recession risks if the RBA is prompted to tighten policy further, but also said ‘maybe there doesn’t need to be any more interest rate rises.’
The ‘Aussie’ may attempt to reverse these losses today with the publication of Australia’s latest inflation figures. An expected jump in inflation in August could reignite more hawkish RBA bets and help AUD regain ground.
New Zealand dollar (NZD) wavers lower amid risk aversion
The New Zealand dollar (NZD) fluctuated yesterday, ultimately trading lower as an anxious mood dampened demand for the risk-sensitive ‘kiwi’.
Today, a forecast improvement in New Zealand business confidence in September could lift NZD exchange rates.
Pound (GBP) uncertain amid lack of data
The pound (GBP) traded without a clear directional bias yesterday amid a lack of UK economic data.
GBP was also seemingly unfazed by Prime Minister Andy Burnham’s keynote speech at the Labour Party Conference, as the address focused primarily on the policies that will be in Labour’s next manifesto.
The UK’s final GDP figures for the second quarter are the focus for today. Confirmation of decent growth could underpin the pound, while Sterling could face steeper movement if the GDP figures are revised.
Euro (EUR) dented by uptick in USD
The euro (EUR) softened against many of its rivals on Tuesday as the single currency suffered from its negative correlation with the rising US dollar (USD).
Eurozone data later in the session failed to help EUR recover. The bloc’s economic sentiment index unexpectedly declined in September, representing the first deterioration since April.
Looking forward, economic data from Germany today could support the euro. Markets expect to see a rebound in retail sales in August and a rise in inflation in
September, with the latter potentially supporting European Central Bank (ECB) interest rate hike bets.
US dollar (USD) buoyed by anxious trade
The US dollar trended higher yesterday as a risk-off market mood provided the safe-haven currency with support.
USD even managed to avoid losses later in the session despite a larger-than-forecast fall in job openings and an unexpected decline in US consumer confidence.
Turning to today, the US core PCE price index is forecast to show that inflation rose in August, which could underpin USD. However, confirmation that the American economy slowed in the second quarter could limit the currency’s gains.
Canadian dollar (CAD) underpinned by GDP recovery
The crude-linked Canadian dollar (CAD) shrugged off softening oil prices yesterday to edge higher against its weaker peers. A recovery in Canadian GDP in August helped support the currency.
With Canadian data in short supply today, oil price dynamics could drive the ‘loonie’. Markets will be keeping an eye on the Middle East, amid indirect talks between the US and Iran on ending the war.
Data releases
10:00 NZD ANZ Business Confidence (Sep)
11:30 AUD Inflation Rate (Aug)
16:00 EUR German Retail Sales (Aug)
16:00 GBP GDP Growth Rate (Q2)
22:00 EUR German Inflation Rate (Sep)
22:30 USD Core PCE Price Index (Aug)
22:30 USD GDP Growth Rate (Q2)