Manufacturing Improvement Unable to Support Pound Sterling (GBP) Exchange Rates
A better-than-expected UK manufacturing PMI only offered the Pound a temporary boost against its rivals on Friday.
Although the headline index picked up from 48.3 to 49.6 in October, reaching a six-month high, this still signalled weakness within the manufacturing sector. With the sector failing to climb out of contraction territory worries over the strength of third quarter gross domestic product persisted, limiting the appeal of the Pound.
A similarly underwhelming performance from the construction sector could leave GBP exchange rates on the back foot today.
Euro (EUR) Struggles amid Lack of Confidence in Eurozone Outlook
The mood towards the Euro proved largely muted towards the close of last week in the absence of any fresh domestic data releases.
With markets still seeing little cause for confidence in the Eurozone’s economic outlook, support for the single currency remained limited. While the US Dollar came under renewed pressure it wasn’t enough to give EUR exchange rates a leg up.
Any weakening of the Eurozone Sentix investor confidence index could see the Euro remain out of favour.
US Dollar (USD) Slides in Spite of Better-than-Expected Payrolls Data
Although October’s change in non-farm payrolls figure showed an increase of 128,000 rather than the forecast 89,000 the US Dollar remained on a weaker footing on Friday. This stronger showing was not enough to prevent the accompanying unemployment rate from picking up to 3.6%.
Today’s factory orders data is expected to show another month of decline so the US Dollar looks vulnerable to further selling pressure.
Uptick in Manufacturing PMI Fails to Lift Canadian Dollar (CAD)
The Canadian Dollar shook off a modest uptick in October’s manufacturing PMI before the weekend, continuing to trend lower against many of the majors. While the reading of 51.2 indicates steady manufacturing growth on the month investors remained cautious. Even an improvement in oil prices was unable to encourage any CAD exchange rate gains.
Signs of Chinese Manufacturing Resilience Benefit Australian Dollar (AUD)
Signs of greater resilience within the Chinese manufacturing sector helped to encourage a general sense of market risk appetite, shoring up the commodity-correlated Australian Dollar (AUD).
Although the third quarter Australian producer price index fell short of forecast this was not enough to knock AUD exchange rates.
However, if the Reserve Bank of Australia (RBA) strikes a dovish tone in its upcoming policy meeting the Australian Dollar could be driven lower.
Upbeat Consumer Sentiment Supports New Zealand Dollar
October’s ANZ consumer confidence index jumped 4% on the month, encouraging NZD exchange rate gains. Although domestic business sentiment remains muted this improvement in the consumer outlook could help to shore up economic activity in the short term. With demand for the US Dollar fading the risk-sensitive New Zealand Dollar found additional support.