Pound Sterling to US Dollar (GBP/USD) Exchange Rate Romps Higher
The Pound to US Dollar (GBP/USD) exchange rate was able to climb by over 0.6% on Monday despite the BBA loans for house purchase figure proving weaker than forecast in February.
Although the domestic housing market still appears to be suffering something of a slowdown, investors remain confident in the wider outlook, especially as the odds of Bank of England (BoE) policy action are still high. However, this level of bullishness leaves GBP exchange rates vulnerable to a fresh downtrend.
With no new UK data due for release today, Sterling may struggle to maintain its upward momentum for long.
US Dollar (USD) Weakness Sends Euro (EUR) Exchange Rates Higher
Confidence in Euro (EUR) exchange rates generally improved on Monday in response to the latest bout of US Dollar weakness.
Investors were further encouraged by a surprise upward revision to the finalised fourth quarter French gross domestic product data. With growth found to have accelerated to 0.7% on the quarter this naturally boosted hopes for the outlook of the wider Eurozone economy.
As a run of confidence reports for the Eurozone are expected to show declining sentiment, however, the appeal of the Euro could diminish sharply this afternoon.
US Dollar (USD) Exchange Rates Suffer Further Losses
Speculation that the US and China could still avoid a full-blown trade war offered some support to US Dollar (USD) exchange rates at the start of the week, although this relief ultimately proved to be short-lived.
With market risk appetite picking back up, demand for the lower-yielding USD naturally declined. An unexpectedly sharp dip in the latest Dallas Fed manufacturing activity index also put pressure on USD exchange rates, undermining confidence in the health of the world’s largest economy.
An uptick in March’s consumer confidence index may see the US Dollar recover some of its losses later today.
Canadian Dollar (CAD) Exchange Rates Struggling as Oil Prices Dip
Even with the general mood of markets improving, the Canadian Dollar struggled to find any momentum yesterday.
While the odds of a global trade war were seen to ease, the appeal of the commodity-correlated currency remained rather limited. In part this was due to Brent crude falling below the US$70 per barrel mark, with investors still jittery over the prospect of a potential breakdown in the unity of OPEC.
Unless oil prices show signs of recovery there is unlikely to be much reason to favour the Canadian Dollar in the near term.
Australian Dollar (AUD) Exchange Rates Rises on Strengthening Risk Appetite
AUD exchange rates lacked any particular momentum at the start of the week in the absence of any fresh domestic data. However, market risk appetite largely picked up in response to speculation that the US and China could still avert a trade war by agreeing new mutual trade measures.
With the US Dollar coming under renewed pressure the Australian Dollar found some degree of support, keeping it on a stronger footing against its weaker rivals.
Unless the HIA new home sales figure shows a solid rebound on the month the ‘Aussie’ is unlikely to find any particular rallying point today.
New Zealand Dollar (NZD) Exchange Rates Boosted by RBNZ
The ‘Kiwi’ strengthened after February’s New Zealand trade balance unexpectedly returned to a state of surplus. NZD exchange rates were also boosted by the first appearance of new Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr and the central bank’s updated Policy Target Mandate.
As the RBNZ’s mandate was not directly changed to adopt a focus on employment as well as inflation investors broadly greeted the news.
Even so, ongoing uncertainty over the global trade outlook is still expected to limit the upside potential of the New Zealand Dollar.