Daily Currency Update
At the close of last week the Pound softened against a number of its rivals following the release of a disappointing GfK Consumer Confidence report. The unexpectedly dramatic slide in sentiment sent Sterling trending lower against the Euro and US Dollar, although ‘Cable’ later recovered ground as the US released a less-than-encouraging average earnings report. Today the UK’s Manufacturing PMI could trigger Pound movement. Any reading above the 51.5 forecast would bolster demand for the British currency but any reading below is likely to push back BoE rate hike bets and drive Sterling lower.
Friday’s Eurozone unemployment report may have come in at a disappointing 11.1% but the Euro still managed to advance across the board during the local session. The catalyst for the Euro gains was the currency bloc’s core consumer price index advancing from 0.8% to 1.0%. Further common currency support came in the form of a representative from the European Commission asserting that the International Monetary Fund’s calls for debt relief for Greece are in line with current plans for the nation’s third bailout. Today’s final Manufacturing PMI’s for France, Germany and the Eurozone, plus any news from Greece, could have an impact on Euro trading.
Before the weekend the US Dollar posted broad-based declines as expectations for a September rate adjustment from the Federal Reserve were dealt a blow in the form of a surprisingly low average wage and benefits report for the US. Wages in the world’s largest economy were shown to have increased by just 0.2% in the three months through June – the lowest result on record. Should today’s US ecostats (which include Personal Consumption, Construction Spending and ISM Manufacturing) underwhelm, the ‘Greenback’ is likely to fall further against the Euro and Pound.
Although Australia’s AiG Performance of Manufacturing Index moved from contraction to growth territory in July, advancing from 44.2 to 50.4, the ‘Aussie’ posted widespread declines during the Australasian session as a result of more concerning news from China. Saturday’s Chinese Manufacturing PMI printed at 50.0 rather than the 50.1 expected, while the final Caixin Manufacturing Index was negatively revised down to 47.8. The data left the Australian Dollar trending lower against the US Dollar, Pound and Euro.
New Zealand Dollar
The New Zealand Dollar weathered the disappointing Chinese manufacturing stats better than its Australian relation on Monday and continued to trend slightly higher off the back of revised Federal Reserve interest rate hike expectations. The week’s first notable ecostat for New Zealand comes in the form of the ANZ Commodity Price Index, due for publication on Tuesday.
The Canadian Dollar plummeted to a fresh seven-year low against the Pound before the weekend as Canada posted a fifth straight month of economic contraction. The GDP report for May had been expected to come in at 0.0% but a figure of -0.2% was actually recorded. Although the ‘Loonie’ managed to recoup some losses thanks to the disappointing US wage data, gains were limited. With Canadian reports lacking today, US news and commodity price shifts will be the main cause of ‘Loonie’ movement.
South African Rand
Sub-par US wage data helped the Rand move away from a 14-year low against the US Dollar on Friday, but the emerging-market currency later took a battering as a result of China’s below-forecast manufacturing reports. The Rand can be expected to continue experiencing volatility in the run up to the Federal Reserve’s first interest rate adjustment.