Daily Currency Update
Although the UK’s GfK Consumer Confidence Index impressed, with the level of sentiment unexpectedly climbing from 4 to 7, the Pound failed to rally and remained trending in a softer position against both the Euro and US Dollar. The British asset could advance if the UK’s second quarter growth data surprises to the upside, but investors will also be focused on the Jackson Hole symposium. Any commentary from Bank of England Governor Mark Carney will be of particular interest. If the events of ‘Black Monday’ appear to have made the central bank chief dovish on the subject of the timeline for increasing borrowing costs the Pound could suffer.
The common currency gained across the board at the beginning of the week as the global stock market slump saw investors unwind carry trades. While the Euro has fallen from the highs achieved against the Pound and US Dollar it remains up on the week. However, that could change if today’s German inflation data confirms that the nation’s annualised CPI slipped from 0.2% to 0.1% in August. Conversely a stronger-than-forecast rate of inflation would be Euro-supportive.
Wednesday’s impressive US Durable Goods Orders report gave the US Dollar a lift and yesterday’s far stronger-than-forecast growth data for the second quarter allowed that uptrend to continue. The US Dollar drove the Pound down to 1.54 as the positive ecostats left industry experts betting that the Fed might still move to increase borrowing costs this year in spite of the turmoil in China. The Jackson Hole Symposium and US Personal Consumption/Consumer Confidence data could spark ‘Greenback’ movement before the weekend.
Although the ‘Aussie’ slipped slightly as the European session got underway, the commodity-driven currency is still notably stronger than it was at the outset of the week when global stock markets crashed. The Australian Dollar was able to recoup losses as China attempted to support the local equity markets and gave commodity prices a boost. With the Reserve Bank of Australia’s interest rate decision looming, plenty of AUD volatility could be on the cards for next week.
New Zealand Dollar
Rebounding commodities and improved risk appetite, aided by the upbeat US GDP report, helped the ‘Kiwi’ move away from Monday’s fresh multi-year low against the Pound. However, with US interest rate hike speculation heightened by the positive US data the New Zealand Dollar trimmed gains before the weekend.
Oil prices jumped by 10% on Thursday in response to China’s intervention in the local equity market and the ‘Loonie’ accordingly strengthened against the Pound. While today’s Canadian Industrial Product Price and Raw Materials Price indices could inspire CAD movement, investors will also be focusing on the Jackson Hole Symposium and looking ahead to next week’s more influential Canadian releases, including the nation’s growth and employment figures.
South African Rand
Rising risk appetite lent the Rand support towards the close of the week, helping the South African asset ease away from the recent record lows recorded against both the Pound and US Dollar. Next week domestic reports with the potential to initiate Rand exchange rate movement include the nation’s KAGISO Manufacturing PMI and Standard Bank PMI.