Daily Currency Update
With investors focusing on the hawkish rate-related commentary from Bank of England (BoE) policymaker Kristin Forbes, the Pound kicked off the week trending higher against both the Euro and US Dollar. The British currency was also supported by the news that asking prices for first time homes increased by 4.9%. As the BoE is likely to take action to prevent the formation of another housing bubble the result was viewed as Pound-positive. With UK data in short supply today it’ll be up to global economic developments to inspire any Sterling volatility.
The US Dollar was left trending in a fairly narrow range against the majority of its currency counterparts on Monday having declined in response to the news that the pace of growth in China is now at its slowest since the height of the global economic crisis. Given that some investors believe the Fed will leave borrowing costs at record lows until fiscal conditions in China pick up, the ‘Greenback’ struggled against the Pound. The day’s only US release, the NAHB Housing Market Index, had little impact on the US Dollar despite showing improvement but today’s domestic Housing Starts and Building Permits numbers may have more of an influence on trading.
As the Eurozone’s latest Construction Output report showed a decline on both the month and year, the Euro consolidated previous declines against the Pound as the European session progressed. The common currency came under further pressure on Tuesday as German Producer Prices fell by more than expected. The nation’s PPI was down -0.4% on the month and -2.1% on the year in September. Additional EUR movement may occur later today when the Eurozone’s Current Account figures are published, although speculation surrounding the European Central Bank’s (ECB) upcoming interest rate announcement will also be driving demand for the asset.
China’s latest growth data revealed that the pace of output slowed to its lowest level since 2009 in the third quarter. As Australia relies heavily on China for trade, the data saw the ‘Aussie’ tumble as the week began. During the Australasian session, AUD firmed slightly against peers like the Pound and US Dollar as the minutes from the last Reserve Bank of Australia (RBA) policy meeting indicated that the central bank is in no rush to cut borrowing costs again.
New Zealand Dollar
The New Zealand Dollar staged a modest rebound ahead of the latest GlobalDairyTrade auction as investors bet that dairy prices will climb. The commodity-driven currency was up on the Pound, US Dollar and Euro but lost ground against the ‘Aussie’ as a result of the RBA’s policy meeting minutes. Tomorrow New Zealand’s Credit Card Spending data could give the ‘Kiwi’ an additional boost if it shows an uptick in sales.
Lower oil prices and concerns relating to the impact slowing growth in China may have on Canadian output and Bank of Canada policy decisions left the ‘Loonie’ lower against the Pound on Monday. While today’s Canadian Wholesale Sales report might not have a substantial impact on the Canadian Dollar, the currency may fluctuate ahead of the BOC’s interest rate announcement and the release of domestic retail sales/inflation data.
South African Rand
After achieving an almost six-week high against a broadly softer US Dollar the South African Rand lost a little ground in the wake of China’s growth report. With markets looking for something concrete to focus on ahead of Wednesday’s stream of influential South African numbers, the Rand may remain in a weaker position in the hours ahead.