US Dollar (USD) Slips as Durable Goods Orders Miss Forecasts
After rising through yesterday morning, the safe-haven US Dollar (USD) then stumbled in the afternoon as markets found their appetite for risk.
This came as US durable goods orders unexpectedly flat-lined last month, ending a four-month growth streak. This downbeat data follows the dismal US PMIs on Tuesday, adding to concerns that the US economy may be slowing, which in turn dampened Federal Reserve rate rise bets.
Later this afternoon, we have the second estimate for US GDP growth along with corporate profits and initial jobless claims. If these releases reinforce the view that the US economy is stuttering, USD could dip. Additionally, the Jackson Hole Symposium starts today, which could mute markets somewhat.
Pound (GBP) Subdued amid Mounting Economic Concerns
The Pound (GBP) was muted yesterday, wavering near weekly lows against many of its peers, as fears about the UK economy outweighed Bank of England (BoE) rate rise bets.
Markets believe that the BoE will hike interest rates by another half point, despite the growing headwinds buffeting the UK economy. However, the prospect of higher rates failed to boost GBP amid intensifying strike action and surging energy prices.
Today’s distributive trades data from the Confederation of British Industry (CBI) could impact GBP. Forecasters predict it will reveal a faster fall in retail sales volumes as consumers struggle with the cost-of-living crisis.
Euro (EUR) Boosted by Drop in USD
The Euro (EUR) initially ticked lower yesterday as rising gas prices contributed to ongoing fears about the Eurozone’s energy crisis.
However, EUR jumped higher in the afternoon thanks to its negative correlation with the US Dollar, which fell sharply later in the session.
Looking ahead, the latest meeting minutes from the European Central Bank (ECB) are in the spotlight for EUR investors. Any hints that policymakers are determined to keep raising interest rates could boost the Euro, although recession fears may cap gains.
Canadian Dollar (CAD) Volatile as Oil Prices Waver
The Canadian Dollar (CAD) fluctuated yesterday as volatility in the oil markets impacted the crude-linked currency.
Turning to today, Canadian business sentiment, manufacturing sales and average weekly earnings are all to be published. Any signs that Canada’s economy is slowing could dent CAD.
Australian Dollar (AUD) Soars on Huge Chinese Fiscal Stimulus
The Australian Dollar (AUD) surged higher overnight after Beijing announced a ¥1trn ($146bn) economic stimulus package to boost China’s ailing economy. As AUD often trades as a proxy for the Chinese economy, this news gave the ‘Aussie’ a significant lift.
New Zealand Dollar (NZD) Strengthens in Risk-On Trade
The New Zealand Dollar (NZD) also climbed in overnight trade as China’s new fiscal stimulus plan cheered investors, thereby boosting the risk-sensitive ‘Kiwi’.