Pound Sterling (GBP) Exchange Rates Dented by Lack of Brexit Progress
With hopes of a potential Brexit breakthrough limited, the Pound remained on the back foot yesterday. Markets see little chance of progress towards a mutually agreeable deal during Boris Johnson’s visit to the UN given persistent Irish backstop concerns. This left GBP exchange rates lacking in support and moving further away from their recent multi-month highs.
Any increase in August’s public sector net borrowing figure may increase the pressure on the Pound today given the uncertainty that continues to cloud the UK’s economic outlook.
EUR Exchange Rates Weaken on German Manufacturing Slump
EUR exchange rates faltered in response to September’s German manufacturing PMI, which slumped from 43.5 to 41.4. With the manufacturing sector falling further into contraction territory worries over the outlook of the Eurozone’s powerhouse economy deepened. The risk of Germany suffering another growth contraction in the third quarter increased on the back of the data, fuelling fears that the country is headed for a technical recession.
Unless the German IFO business climate index shows an improvement on the month the Euro looks set to remain under pressure today.
US Dollar (USD) Exchange Rates Struggle in Spite of Positive Data
While the Chicago Fed national activity index saw an unexpectedly positive reading in August, strengthening from -0.36 to 0.10, this was not enough to boost the US Dollar. Even though this increase points towards greater resilience within the US manufacturing sector USD exchange rates struggled to find any particular traction. With the Federal Reserve still under political pressure investors saw little reason to favour the US Dollar.
If the Richmond Fed manufacturing index weakens on the month as forecast this could leave USD exchange rates exposed to fresh selling pressure.
Solid Wholesale Sales Fail to Shore up Canadian Dollar (CAD) Exchange Rates
July’s wholesale sales surprised to the upside at 1.7%, defying expectations of a modest contraction. Even so, the Canadian Dollar struggled to capitalise on this positive showing as the strength of the oil market diminished. With prices no longer on a bullish streak support for CAD exchange rates weakened.
In the absence of any fresh Canadian data releases CAD exchange rates are expected to maintain a bearish bias today.
Service Sector Resurgence Buoys Australian Dollar (AUD) Exchange Rates
A surprise return to positive territory for September’s services PMI helped to lift demand for the Australian Dollar on Monday. The index edged up from 49.1 to 52.5, encouraging confidence in the outlook of the wider economy even though the accompanying manufacturing PMI slipped. While the performance of the Australian economy remains mixed the uptick in the overall composite PMI still gave AUD exchange rates a leg up.
Overnight the ANZ weekly consumer confidence index also improved, rising from 109.3 to 110.1.
New Zealand Dollar (NZD) Exchange Rates Shake off Gloomy IMF Report
The New Zealand Dollar recovered ground at the start of the week, shaking off the negative impact of an International Monetary Fund (IMF) report. As the IMF noted that downside risks to the economic growth outlook have increased NZD exchange rates initially trended lower across the board. However, as the US Dollar fell out of favour this soon helped to shore up the New Zealand Dollar against its rivals.
However, NZD exchange rates may struggle to hold onto a positive footing as markets brace for tomorrow’s trade data.