Commodity currencies gain strength

Poor PMI figures released by Europe on Friday for the eurozone and the UK give credibility to the idea that further monetary tightening by the ECB and BoE may not be in the cards. The Swiss franc also felt the pressure. Commodity currencies, led by the New Zealand dollar, flexed their muscles. The substantial comeback in Hong Kong markets could support the Australian and New Zealand dollar. The likelihood that China’s economic recovery would pick up speed in the second half of the year is generating growing enthusiasm.

Swiss franc continues to weaken

To start the week Australian and New Zealand dollars have become slightly softer on the currency markets as a result of mixed market views. The Swiss franc appears eager to continue its week-old decline. In the meantime, the Canadian dollar, the US dollar, and the euro are all remaining firm. Although the British pound is trying to recover, the pace is still slow. The release of inflation statistics from Australia, the eurozone, and the US will be closely watched as the week goes on, and could potentially influence future movements in currency markets.

Decline anticipated in US PCE Inflation rate

The next monthly CPI for Australia is anticipated to increase from 4.9% yoy to 5.2% yoy in August. Moving on to Europe, it is predicted that the CPI flash for the eurozone would slow down in September, coming in at 4.5% yoy, a decrease from the previous 5.2%. The bank is leaning towards a protracted pause following the recent 25bps rate increase by the ECB. The US core PCE inflation rate is anticipated to decrease from its July level of 4.2% yoy to 3.9% yoy in August. The US durable goods orders and consumer confidence, Germany’s IFO business climate, Canada’s GDP, and Australia’s retail sales are just a few of the important data that will be watched by markets this week in addition to the ones mentioned above.