Daily Currency Update
After domestic data showed that British Consumer Confidence dropped beyond expectations in September, the Pound softened versus most of its major peers. Sterling depreciation has been minimal in the early stages of Wednesday’s European session, however, thanks to a 0.5% rise in September’s monthly Nationwide House Prices report. As traders await the final figure for second-quarter Gross Domestic Product, the British asset is likely to trend narrowly. Given that there have already been some major upward revisions to GDP between 2011 and 2013, many economists expect further upgrades. This is likely to bolster the confidence of the Chancellor George Osborne and give fodder to retort against accusations fired by the leader of the opposition, but it is unlikely to pressure the Bank of England (BoE) into hiking the benchmark interest rate.
Thus far on Wednesday, German data printed poorly which is weighing on demand for the common currency. August’s Retail Sales saw just 2.5% growth on the year which missed the median market projection of 3.3% sales growth. On a monthly basis, Germany’s retail sales contracted by -0.4%. Later on Wednesday morning German labour market data is likely to provoke single currency volatility. With the potential for massive layoffs in Germany’s automotive industry, the government will be hoping for an unexpected drop in unemployment to cushion the blow. Eurozone inflation data, also due later on Wednesday morning, will be of interest to those invested in the shared asset.
After US Consumer Confidence unexpectedly rose in September, the US Dollar advanced versus many of its peers. However, mounting uncertainties regarding the timing of the Federal Reserve benchmark rate lift-off is weighing on sentiment. With mixed messages from Fed officials, divergent data results and external pressures from China’s economic woes, the US Dollar could see subdued trade ahead of mortgages data due for publication during Wednesday’s North American session.
Glencore stocks gained for a second day in London which allowed metal prices to rally after a long period of depreciation. Base metals were among those commodities hardest hit by China’s ailing economic progress. The Australian Dollar edged higher on the news, but gains have been limited with gold prices struggling and iron ore prices still comparatively weak. Mixed results from domestic data, which saw Private Sector Credit gain by Building Approvals decline, had minimal impact on ‘Aussie’ (AUD) volatility.
New Zealand Dollar
After the Shanghai Composite Index ended the Asian session 0.5% up, the New Zealand Dollar strengthened versus its major peers. Additional gains can be attributed to the recent rise in dairy prices. However, the ‘Kiwi’ (NZD) has made steady gains of late which could undermine the Reserve Bank of New Zealand’s (RBNZ) attempts to devalue the currency. Should this be the case, the central bank may be forced into easing monetary policy again.
Oil prices advanced overnight amid speculation output from the US will slow considerably. However, prices edged lower as Wednesday’s European session opened as crude futures remain vulnerable to China’s economic slowdown and dwindling global demand. The Canadian Dollar is trending narrowly versus most of its major rivals today ahead of July’s Gross Domestic Product report. Should growth meet or exceed the forecast 0.7% increase the ‘Loonie’ (CAD) is likely to rally.
South African Rand
South African economic data printed positively on Wednesday morning which stimulated a Rand uptrend. August’s Money Supply and Private Sector Credit reports bettered estimates. The confusion surrounding Federal Reserve rate hike bets is also aiding demand for the Rand.