No-Deal Brexit Fears Keep Pound Sterling (GBP) Exchange Rates Pressured
Confidence in the Pound (GBP) remained generally lacking yesterday as anxiety over the risk of a no-deal Brexit persisted. The ongoing Conservative leadership contest continued to weigh on GBP exchange rates, meanwhile, with markets pricing in a potential general election before the end of the year.
The Pound came under further pressure as the British Retail Consortium’s sales report showed that total sales were down by 1.3% last month, while the annual rate of growth slowed to 0.6%. The report revealed that consumer spending is at its weakest levels since records began. With no other UK reports to focus on today the Pound is lacking any potential rallying points.
Disappointing German Industrial Production Weighs on Euro (EUR) Exchange Rates
May’s German industrial production data disappointed on Monday, following in the footsteps of Friday’s underwhelming factory orders figures. This offered fresh evidence that the Eurozone’s powerhouse economy continues to lack momentum within its manufacturing sector, to the detriment of the Euro. Even so, the downside pressure on EUR exchange rates was limited thanks to a stronger-than-expected rebound in German export volumes on the month.
There is no notable Eurozone data due out today.
US Dollar (USD) Exchange Rates Trend Higher Ahead of Business Optimism Index
As market risk appetite diminished the US Dollar benefitted, with the currency holding a stronger footing across the board at the start of the week. While investors still expect the Federal Reserve to cut interest rates at its July meeting, in spite of last week’s solid jobs data, this was not enough to weigh down USD exchange rates. With demand for commodity-correlated currencies limited the US Dollar was pushed higher against many of the majors.
Any deterioration in the NFIB small business optimism index could weigh on USD exchange rates this morning however.
Oil Price Uptick Unable to Shore up Canadian Dollar (CAD) Exchange Rates
Although oil prices remained on a positive footing yesterday, Canadian Dollar (CAD) exchange rates still struggled to find support. While escalating tensions in the Middle East threaten to limit global oil supplies the prospect of further conflict limited the appeal of the risk-sensitive Canadian Dollar. With the Chinese economy also showing signs of slowing there are concerns that global oil demand is likely to diminish, potentially dragging prices down once again.
A weaker month of growth in building permits may leave CAD exchange rates on the back foot this afternoon.
Australian Dollar (AUD) Exchange Rates Struggle for Direction
The Australian Dollar (AUD) started the week on a softer footing, lacking the support of any fresh domestic data. With the Reserve Bank of Australia (RBA) still appearing on course to cut interest rates again before the end of the year AUD exchange rates struggled to push forward. Anxiety over a continued lack of progress towards a US-China trade agreement also limited the appeal of the antipodean currency yesterday, with investors remaining in a relatively risk-averse mind set.
This morning’s NAB business confidence index dropped from 7 to 2, inspiring ‘Aussie’ losses against the Pound, Euro and US Dollar.
Market Risk-Aversion Fails to Dent New Zealand Dollar
Risk appetite was suppressed at the start of the week but the New Zealand Dollar (NZD) managed to avoid a downtrend. However, as global trade tensions persist and central banks continue to shift towards a dovish outlook this could drag NZD exchange rates down in the near future.
New Zealand’s food price report could inspire modest NZD movement this evening.