BoE Policymaker Fuels Pound Sterling (GBP) Exchange Rate Losses
The mood towards the Pound soured ahead of the weekend on the back of commentary from Bank of England (BoE) policymaker Michael Saunders. As Saunders indicated that it is ‘quite plausible’ that the next interest rate move will be down rather than up GBP exchange rates dipped. The indication that a prolonged period of Brexit uncertainty could force the BoE to cut rates added to the bearish mood as markets hurried to price in the prospect of a cut.
Political anxiety looks set to keep the Pound under pressure today, even if the latest net consumer credit figure shows an improvement on the month.
Will German Inflation Data Weaken the Euro?
Another marked contraction in German import prices fuelled bets that inflationary pressure within the Eurozone’s powerhouse economy remains weak. As the French consumer price index also showed a deterioration on the month in September the likelihood of further European Central Bank (ECB) policy action remains high. Even so, the Euro was able to hold onto a positive footing against many of the majors as it recovered from Thursday’s bout of selling pressure.
However, the Euro could come under pressure later today if the headline German inflation rate shows another decline.
Surprise Durable Goods Orders Growth Fails to Boost US Dollar
Although August’s durable goods orders data delivered an unexpectedly positive result, clocking in at 0.2% rather than -1%, this failed to shore up USD exchange rates before the weekend. As the Federal Reserve continued to inject capital into the money markets investors saw little cause for confidence in the economic outlook. With the risk of further monetary loosening remaining and with market sentiment improving the US Dollar struggled to find any support.
If the Chicago PMI remains sluggish this may drive further losses for USD exchange rates overnight.
Oil Price Slump Limits Canadian Dollar (CAD) Upside
Reports that Saudi Arabia had agreed to a partial ceasefire in Yemen saw oil prices slump on Friday amid hopes of tensions in the region easing. Even so, this failed to drag CAD exchange rates lower thanks to the relative weakness of the commodity-correlated currency’s rivals.
However, with forecasts pointing towards a contraction in August’s producer price index confidence in the Canadian Dollar could quickly fade over the course of the day.
Chinese Industrial Profits Fall Dents Australian Dollar (AUD) Exchange Rates
Another sharp monthly decline in Chinese industrial profits weighed heavily on the risk-sensitive Australian Dollar. As the general sense of market risk appetite weakened in response to this latest sign of China’s slowing economy AUD exchange rates were left on a weaker footing. Although signs of easing Middle Eastern tensions helped to improve market sentiment during Friday’s European session this failed to give the Australian Dollar any significant boost.
AUD exchange rates also remain under pressure ahead of tomorrow’s Reserve Bank of Australia (RBA) policy decision.
Consumer Confidence Decline Drags on New Zealand Dollar (NZD)
Demand for the New Zealand Dollar proved limited as September’s ANZ Roy Morgan consumer confidence index came in weaker than forecast. With domestic sentiment weakening worries over the underlying health of the New Zealand economy picked up once again. While a general improvement in risk appetite helped to limit the downside bias of NZD exchange rates this was not enough to offset the negative data.
The corresponding business confidence index also fell deeper into negative territory overnight, sliding from -52.3 to -53.5.