Sterling
The Pound is making a small recovery today after revelations at yesterday’s G20 summit in China softened the UK asset. According to Chancellor Philip Hammond, the topic of Brexit had arisen ‘a great deal’ during the talks. While stating that the G20 group had the tools to weather any potential economic and financial consequences following the UK’s shock decision, investors were left wary after comments that the referendum had added to global uncertainty. Hammond himself noted that the referendum result will ‘hang over the world economic outlook’ for at least the next two years.
With nothing else on the data calendar today, the UK’s CBI Trends Total Orders, Trends Selling Prices and Business Optimism indices could have an exaggerated impact upon Sterling.
Euro
The Pound Sterling to Euro exchange rate has advanced by 50 pips today despite positive Eurozone data. The German IFO indices have all bettered forecasts, suggesting confidence in the Eurozone’s powerhouse economy has not been overly damaged by the UK’s Brexit decision thus far.
The Business Climate index slipped from 108.7 to 108.3 instead of dropping to 107.5, while the Expectations index softened to 102.2 from 103.1 rather than clocking in at 101.6. The Current Assessment performed the best, strengthening from an upwardly-revised 114.6 to 114.7 instead of weakening to 114.0.
There is no Eurozone data left for release today.
US Dollar
‘Cable’ has resumed last week’s choppy trading. The Pound may be ascending, but the GBP/USD exchange rate is still trending around one-and-a-half cents below Friday’s early morning high.
The US Dollar is beginning to strengthen in other pairings thanks to expectations of an interest rate freeze from the Federal Reserve. Gold prices have dropped as investors pull out of the safe-haven asset, pointing towards market confidence that the Fed’s accompanying statement will reveal a more upbeat economic assessment thanks to recovering domestic data.
The US Dollar is unlikely to gain much momentum from today’s economic calendar, with only the low-impact Dallas Fed Manufacturing Activity index for July likely to affect the ‘Greenback’.
Canadian Dollar
Persistent weakness in the oil market has allowed the Pound to Canadian Dollar exchange rate to trend bullishly today, making an 80 pip gain since the opening of trade this morning.
WTI crude oil is once again back under the US$45 per barrel mark and threatening to dip below US$44. The commodity has erased almost eleven weeks of gains since the beginning of June. Brent crude is similarly weak, with the current price of US$45.50 a long way from June’s highs of nearly US$52 per barrel.
There is nothing on the economic calendar for Canada today.
Australian Dollar
Sterling is making only small advances on the Australian Dollar today, with both currencies experiencing healthy demand. Chinese iron ore prices have risen 0.7%, suggesting the uptrend in demand is continuing. There is no domestic data to provide support today. However, a lack of US data could remove the possibility of a strengthening ‘Greenback’ curbing ‘Aussie’ gains. The fact that gold prices have fallen while European stocks are on the rise suggests a market shift away from low-yield, which could help boost the Australian Dollar as the session continues.
New Zealand Dollar
The Pound to New Zealand Dollar exchange rate remains bullish today, making gains of around 150 pips. Continued Reserve Bank of New Zealand (RBNZ) rate cut bets are keeping NZD on a downtrend. New Zealand government bond yields have edged lower, indicating market expectations that the high-risk ‘Kiwi’ will soon be undermined by further policy easing. RBNZ Governor Graeme Wheeler is making a private speech today; should rumours suggest a dovish outlook, the ‘Kiwi’ could face even more downside pressure.
Trade balance figures later in the day will also motivate GBP/NZD movement.
Data Released
11.00 GBP CBI Trends Total Orders (JUL) Low -6
11.00 GBP CBI Trends Selling Prices (JUL) Low
11.00 GBP CBI Business Optimism (JUL) Low -15
15.30 USD Dallas Fed Manufacturing Activity (JUL) Low -10
23.45 NZD Trade Balance (New Zealand dollars) (JUN) Medium 127m