Pound Sterling (GBP) Exchange Rate Weaker Before Autumn Statement
Following a disappointing UK Public Sector Net Borrowing figure, which showed a smaller narrowing of the borrowing deficit than investors had expected, the Pound has remained on rather softer form. Movement has been relatively limited for Sterling ahead of the week’s Autumn Statement from Chancellor George Osborne, with markets preparing for the announcement of harsh austerity measures. As the odds of an imminent move on interest rates from the Bank of England (BoE) remain diminished in the wake of a weak domestic inflation reading the Pound has generally continued on a downtrend. With expectations also rather muted for Friday’s third quarter GDP, Sterling could well remain in a weaker position against rivals over the coming days.
Euro (EUR) Exchange Rate Bolstered by Increased German Business Confidence
Despite persistent indications from the European Central Bank (ECB) that monetary loosening is likely to occur at its December policy meeting, the single currency has remained generally buoyant over the last week. Traders have been somewhat relieved by the confirmation that Greece will be receiving its next tranche of bailout funds, having satisfied creditors in its first review, despite geopolitical tensions continuing to rise within the wider Eurozone. As Germany’s Manufacturing and Services PMIs bettered estimates and the latest IFO Business Sentiment Survey demonstrated an unexpectedly strong upturn in domestic confidence the Euro has made further gains.
US Dollar (USD) Movement Limited ahead of Third Quarter US GDP
The Federal Open Market Committee’s (FOMC) October meeting minutes proved rather more hawkish than pundits might have anticipated, strongly signalling that a December interest rate rise is under consideration. Nevertheless, after an initial surge in demand the US Dollar was quickly weighed down by a round of profit taking as markets reacted positively to the decreased uncertainty that these minutes triggered. After an uneventful Federal Reserve Discount Rate Policy Meeting the ‘Greenback’ has been in more mixed spirits on Tuesday morning, as trade calms in advance of the third quarter US GDP and November Consumer Confidence reports.
Australian Dollar (AUD) Exchange Rate Buoyant Despite Multi-Year Low Copper
Having gained some strength on the back of profit taking against the ‘Buck’, the antipodean currency was prompted to edge downwards once more after copper fell to a six-and-a-half year low during trade on Monday. However, the recent hawkishness of Reserve Bank of Australia (RBA) policymakers has prevented the ‘Aussie’ from holding its bearish trend despite the increasing likelihood of a December rate hike from the Fed.
New Zealand Dollar (NZD) Conversion Rate Trends Lower on Odds of RBNZ Interest Rate Cut
Sentiment towards the ‘Kiwi’ has remained rather weak following the third consecutive session of price declines at the latest GlobalDairyTrade auction, with the outlook of the New Zealand dairy industry becoming rather dimmer. As speculation points towards a Reserve Bank of New Zealand (RBNZ) interest rate cut before the end of the year, the rising odds of policy divergence between the RBNZ and the Fed has been dampening the prospects of the South Pacific currency.
Canadian Dollar (CAD) Exchange Rate Fluctuates on Oil Glut Worries
The ‘Loonie’ has continued to experience volatility as the commodity-correlated currency tracks the varying developments in the oil market, with global supply glut concerns having pushed Brent crude back towards the $40 mark. Traders have failed to see any substantial result from recent pledges of market stabilisation from Saudi Arabia, although oil prices were driven up once more as Middle Eastern tensions flared in response to the downing of a Russian fighter plane.