US Dollar Soars in Risk-Off Trade

US Dollar (USD) Strengthens in Risk-Off Trade

The US Dollar (USD) rallied at the end of last week. A jittery market mood saw investors favour the safe-haven currency.

However the ‘Greenback’ was unable to consolidate at its best levels. Despite the core PCE price index – the Federal Reserve’s preferred indicator for inflation – printing above expectations in August.

Turning to today’s session the spotlight will be on the latest ISM manufacturing PMI. Will another robust expansion of the US factory sector in September help to push the US dollar even higher?

Pound (GBP) Dented By UK Fiscal Concerns

The Pound (GBP) stumbled at the end of last week. The government’s refusal to publish the latest forecasts from the Office for Budget Responsibility’s (OBR) weighing on Sterling sentiment.

This offset the publication of the UK’s latest GDP figures. The second quarter’s finalised growth figures surprised to the upside. An expansion of 0.2% growth helping to dampen recession fears.

However, the news that Chancellor Kwasi Kwarteng’s has made a U-turn on the tax cuts for higher earners seems to have brough the Pound some cheer at the start of this week.

Euro (EUR) Undermined by Ukraine Concerns

The Euro (EUR) also trended lower on Friday. Vladimir Putin’s move to illegally annex parts of Ukraine stoked fears of an escalation of the war in Ukraine.

The news overshadowed the publication of the Eurozone’s consumer price index. September’s preliminary figures reported inflation in the bloc rocketed to a new record high of 10%.

Coming up, September’s finalised Eurozone manufacturing PMI could apply additional pressure to EUR exchange rates if they confirm output slipped as forecast.

Canadian Dollar (CAD) Firms as Oil Ends the Week Up

The Canadian Dollar (CAD) firmed on Friday. Demand for the commodity-linked currency was bolstered after oil prices registered their first weekly gain in five weeks.

Looking ahead, movement in the ‘Loonie’ is likely to remain tied to oil price dynamics, potentially leading to volatility if prices continue to fluctuate.

Australian Dollar (AUD) Firms Ahead of RBA Meeting

The Australian Dollar (AUD) opened this week on solid footing. A risk-on mood helping to underpin demand for the ‘Aussie’.

The Reserve Bank of Australia’s (RB)A latest policy meeting will be a key focus for AUD investors later tonight. Could another ‘dovish’ rate hike undermined AUD exchange rates?

New Zealand Dollar (NZD) Strengthens in Risk-On Trade

The New Zealand Dollar (NZD) trended higher overnight, the risk-sensitive ‘Kiwi’ also benefitting from the upbeat market sentiment.

Matthew Andrews

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