Australian Dollar Surges as Chinese Deflation Fears Ease

Australian Dollar (AUD) Boosted by Chinese Inflation Hopes

Following a return to inflation in China’s consumer price index, the Australian Dollar (AUD) rallied during yesterday’s session.

As both a risk-sensitive and China-proxy currency, the ‘Aussie’ climbed following the positive Chinese data.

This morning, September’s consumer confidence index is forecast to increase modestly, which may boost the ‘Aussie’. However, a drop in August’s business confidence reading may dampen any gains.

New Zealand Dollar (NZD) Boosted by Cheery Trade

During Monday’s trade, the New Zealand Dollar (NZD) strengthened against most major peers as the risk-on currency enjoyed the upbeat market mood.

Global risk appetite improved amid signs of easing deflation in China. Similarly, news that the Bank of Japan (BoJ) may move away from their ultra-loose monetary policy further cheered investors.

Risk sentiment could continue to drive NZD rates today, as a short supply of data leaves the risk-sensitive ‘Kiwi’ exposed to the market mood.

Pound (GBP) Buoyed by Upbeat Market Mood

Owing to a decidedly risk-on market impulse, the Pound (GBP) was able to gain ground against its safer peers during Monday’s session.

However, these gains may have been trimmed by a decline in Bank of England (BoE) rate hike bets, as investors continued to digest the BoE’s recent dovish outlook.

The UK’s latest labour data is due to print this afternoon, with economists forecasting an uptick in unemployment and no change in wage growth. Could this data bring fresh volatility to GBP?

Euro (EUR) Limited by EU Forecast Downgrades

The European Commission lowered the Eurozone GDP forecast yesterday, which sapped sentiment towards the Euro (EUR).

However, broad weakness in the US Dollar (USD) may have yielded modest cushioning, due to the pairing’s negative correlation.

The German ZEW economic sentiment index is due this evening. Economists anticipate sentiment to deteriorate further in September, which could weaken the common currency.

US Dollar (USD) Weakens amid Improving Risk Appetite

During yesterday’s session, support for the safe-haven US Dollar (USD) dwindled as upbeat investors turned to riskier assets.

In addition to the upbeat market mood, a rebound in commodity prices put some pressure on the ‘Greenback’.

Today, USD may endure directionless trade as investors shift attention towards tomorrow’s inflation data.

Canadian Dollar (CAD) Bolstered by Rising Oil Prices

Rising oil prices strengthened the commodity-linked Canadian Dollar (CAD) on Monday, with renewed optimism for Chinese economic growth boosting demand.

With a blank calendar for CAD today, the ‘Loonie’ may continue to rely on oil price dynamics to gain ground.

Data Releases

Sep 12th 10:30???? AUD???? Westpac Consumer Confidence (Sep) ????0.6%

Sep 12th 11:30???? AUD???? NAB Business Confidence (Aug)???? 1

Sep 12th 16:00???? GBP???? Unemployment Rate (Jul)???? 4.3%

Sep 12th 16:00???? GBP???? Average Earnings (Jul)???? 7.8%

Sep 12th 19:00???? EUR???? DE ZEW Economic Sentiment Index???? -15