Daily Currency Update
Sterling managed to romp higher against a number of its peers on Friday as investors responded to hawkish interest rate related commentary from Bank of England (BoE) policymaker Kirstin Forbes. After Forbes intimated that a UK interest rate hike could occur sooner than markets currently envisage the Pound firmed, consolidating gains accrued earlier in the week following the release of an upbeat UK labour market report. Yesterday's Rightmove House Price data revealed property price gains of 0.6% on the month and 5.6% on the year, down from the figures recorded in September. Other UK news is lacking today so the Pound's movement may be limited.
After struggling for much of the week on the back of negatively adjusted Federal Reserve interest rate hike expectations, the US Dollar rallied before the weekend thanks to an impressive increase in the University of Michigan Confidence Index. The measure pushed from 87.2 to 92.1 in October, beating forecasts for a reading of 89.0. US Manufacturing Production was also shown to have eased by less-than-expected in September. The only US data to focus on today is the NAHB Housing Market Index for October.
Last week European Central Bank (ECB) policymaker Ewald Nowotny asserted that it is 'obvious' that the central bank needs to do more to boost inflation. While the remarks were seen to up the odds of the central bank expanding stimulus in the near future, the prospect of the institution's quantitative easing programme being adjusted has already been priced in to a certain extent and the impact of the comments on the Euro were subsequently limited. While the Euro is currently trending in a slightly softer position against the Pound, the European currency could edge upwards later if the Eurozone's Construction Output report prints well.
Mixed data from China left the Australian Dollar trending slightly higher on Monday. Although the annual rate of industrial production fell short, printing at 5.7% in September rather than the 6.0% forecast, retail sales growth increased unexpectedly and China's third quarter GDP didn't show as severe a slowing in output as feared. While the annualised 3Q growth rate of 6.9% is still concerning, the fact that GDP didn't print at 6.8% as forecast saw commodity-driven currencies like the Australian Dollar fluctuate. The 'Aussie' could be in for further movement tomorrow as the Reserve Bank of Australia (RBA) publishes its policy meeting minutes.
New Zealand Dollar
The New Zealand Dollar closed out the local session trading in a slightly softer position against peers like the Pound as easing growth in China weighed on 'Kiwi' trading. Over the weekend New Zealand's Performance of Services Index printed at 59.3, up from a positively revised reading of 58.5 in August. Influential ecostats from New Zealand are limited ahead of Wednesday and the release of the nation's Credit Card Spending numbers.
With oil prices falling in response to the latest dip in Chinese GDP, the Canadian Dollar eased lower against the Pound during Monday's European session. This week 'Loonie' shifts are most likely to occur in response to the Bank of Canada's (BOC) interest rate decision and the tone adopted in the accompanying policy statement. Tomorrow's Canadian Wholesale Sales report will also be of interest.
South African Rand
On Monday the Rand remained trending close to a six week high against the US Dollar as investors processed the impact China's growth report is likely to have on Federal Reserve interest rate hike expectations. South African data was in extremely short supply last week but the nation is set to publish inflation and retail sales numbers on Wednesday and both reports have the potential to spark some serious Rand volatility.