US Dollar Climbs amid Risk Aversion

US Dollar (USD) Strengthens as Mood Sours

The US Dollar (USD) firmed on Friday as anxious investors sought out safer currencies.

Worries about higher US interest rates and the escalating violence in the Middle East soured the market mood, thereby boosting the safe-haven ‘Greenback’.

Amid a lack of notable American economic data today, USD could trade on risk appetite. Will a gloomy global outlook see USD rise even higher?

Pound (GBP) Slips as UK Outlook Clouds Over

The Pound (GBP) softened on Friday as fresh concerns about the UK economy dampened GBP’s appeal.

New data showed that company insolvencies in England and Wales rose 17% year-on-year in September. Meanwhile, UK Chancellor Jeremy Hunt warned of ‘challenges’ ahead and ‘difficult decisions’ to be made in his upcoming Autumn Statement.

Looking ahead, Bank of England (BoE) Chief Economist Huw Pill is due to speak this morning. Any hints that the bank is open to further rate hikes could lend Sterling support.

Euro (EUR) Undermined by USD Strength

The Euro (EUR) was mixed on Friday, wavering slightly lower due to the currency’s negative trading relationship with a rising US Dollar.

A stronger-than-forecast recovery in Eurozone industrial production lent EUR some support, while dovish comments from European Central Bank (ECB) President Christine Lagarde weighed on the Euro.

Turning to today’s session, the Eurozone’s balance of trade data this morning could impact EUR. With the bloc’s trade surplus expected to have nearly doubled in August, the single currency could gain ground.

Canadian Dollar (CAD) Gains as Oil Prices Climb

The crude-linked Canadian Dollar (CAD) moved higher on Friday, with rising oil prices and a strong US Dollar both boosting the ‘Loonie’.

Market-moving Canadian data is absent today. As a result, oil price dynamics may drive CAD movement.

Australian Dollar (AUD) Firms despite Risk Aversion

The Australian Dollar (AUD) moved higher overnight following last week’s slump, although its recovery was limited by a risk-off market mood.

New Zealand Dollar (NZD) Recoups Some Losses

The New Zealand Dollar (NZD) also managed to crawl up from recent lows overnight. However, as with the ‘Aussie’, the ‘Kiwi’ was capped by risk aversion.

Samuel Birnie

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