Daily Currency Update

Pound Sterling

After hitting a one-month high of over 1.38, the GBP/EUR exchange rate tumbled back to 1.37 before the close of Tuesday’s European session. Demand for the Pound ebbed as UK public finance data provided cause for concern and Sterling also lost ground against a number of its other most traded currency counterparts. With UK data lacking this week further Sterling movement may be limited.


Although the Volkswagen scandal had a damaging impact on the company’s shares and could spell trouble for the fortunes of the Eurozone’s largest economy, the Euro weathered the storm well yesterday and closed out the session higher against the Pound. Even a worse-than-forecast Consumer Confidence reading for the Eurozone failed to have much of an impact on the EUR/GBP pair ahead of today’s stream of Markit Manufacturing, Services and Composite PMIs for the currency bloc. However, signs of slowing growth in the region’s major nations may drive the Euro lower in the hours ahead.

US Dollar

Commentary from Federal Reserve official Dennis Lockhart regarding the likelihood of the central bank increasing interest rates in 2015 drove the US Dollar higher on Tuesday. The ‘Greenback’ extended gains against the Pound following the release of disappointing UK public finance figures but fluctuated after the Richmond Fed Manufacturing Index fell dramatically from 0 to -5. A reading of 2 had been projected. Today’s US Manufacturing PMI is forecast to have fallen from 53.0 to 52.8 in September, a result which may knock the appeal of the US Dollar given how volatile 2015 interest rate hike expectations have become.

Australian Dollar

The Australian Dollar was left trending broadly lower on Wednesday as China’s latest Manufacturing PMI fanned fears relating to the economic slowdown in the world’s second largest economy. The Caixin Manufacturing PMI had been expected to improve from 47.3 to 47.5, but a figure of 47.0 was recorded. With the sector slipping further into contraction territory, the prospects for Australian exports are dimmer and demand for the ‘Aussie’ accordingly weaker.

New Zealand Dollar

FX Update WednesdayIn the wake of China’s less-than-impressive manufacturing report, commodity-driven currencies like the New Zealand Dollar took a bit of a kicking. The ‘Kiwi’ was down against the Pound, US Dollar and Euro, but managed to register a modest gain against the struggling Australian Dollar. New Zealand’s upcoming trade balance data could put the New Zealand Dollar under additional pressure if it shows the widening of the nation’s deficit forecast by economists.

Canadian Dollar

Ahead of the publication of Canada’s latest retail sales data, the ‘Loonie’ was trending in a broadly softer position thanks to subpar Chinese data inspiring an increase in oil prices. Consumer spending in Canada is believed to have increased by 0.8% on the month in July, up from the 0.6% gain recorded in June. A positive result could help the ‘Loonie’ extend gains as trading progresses.

South African Rand

With emerging-market and commodity-driven currencies suffering as a result of renewed Chinese slowdown concerns, the Rand dipped against both the US Dollar and Pound. The South African currency experienced additional movement after domestic inflation printed at 4.6%, less than the 4.8% forecast and down from July’s annual inflation rate of 5%. With the South African Reserve Bank scheduled to deliver its interest rate decision later today, further Rand volatility can be expected.

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