Hopes of Political Certainty Boost Pound (GBP)
GBP exchange rates pushed higher across the board on Monday despite an absence of fresh domestic data. Markets are becoming more confident that the UK will be able to avoid a hung parliament, and the prospect of the 12th December election bringing an end to political uncertainty bolstered demand for the Pound.
Signs of recovery from the CBI industrial trends orders index may give GBP exchange rates a fresh leg up today.
Signs of ECB Optimism Shore up Euro (EUR) Exchange Rates
Positive comments from European Central Bank (ECB) policymaker Boštjan Vasle gave the Euro a boost yesterday. Vasle noted that Eurozone growth has stabilised and that the ECB’s recent stimulus is working as intended.
This more optimistic assessment encouraged hopes that the central bank might refrain from unleashing further monetary loosening in the near future.
The Euro could extend its gains later today as forecasts point towards a strong monthly uptick in Eurozone construction output.
Housing Market Disappointment Limits US Dollar (USD) Upside
A surprise dip in November’s NAHB housing market index kept the US Dollar under pressure yesterday, even as market risk appetite faded.
With the US housing market showing renewed signs of weakness USD exchange rates stumbled, fuelled by lingering anxiety over the underlying health of the world’s largest economy.
Any weakness in the latest US building permits figure may see USD exchange rates shed further ground.
Canadian Dollar (CAD) Weakens as Risk Appetite Eases
Conflicting headlines about US-China trade tensions limited the appeal of the Canadian Dollar yesterday. Oil prices also came under renewed pressure as concerns over the health of global demand picked up, leaving the commodity-correlated Canadian Dollar on a generally weaker footing.
CAD exchange rates could soften again later as markets anticipate a contraction from September’s manufacturing sales data.
Australian Dollar (AUD) Static after RBA Meeting Minutes
Increasing scepticism over the chances of an imminent US-China trade agreement left the Australian Dollar on a weaker footing at the start of the week, despite media reports suggesting that the two sides engaged in ‘constructive’ talks over the weekend.
The Australian Dollar was then left trading statically against the Pound and US Dollar following the publication of the Reserve Bank of Australia’s (RBA) policy meeting minutes.
The minutes revealed that the RBA was a lot closer to cutting the official cash rate at its November meeting than markets predicted.
Strong Service Sector Performance Bolsters New Zealand Dollar
Confidence in New Zealand’s economic outlook improved in the wake of October’s services PMI, which picked up from 54.5 to 55.4. With the service sector continuing to demonstrate solid growth in spite of global slowdown worries NZD exchange rates found fresh support.
However, an increasing sense of market risk aversion soon saw the New Zealand Dollar stumble once again.
Yesterday’s New Zealand consumer price index came in at 0.9% on the quarter, up from 0.3% on the previous quarter.