Australian Dollar
Australia’s second-quarter Construction Work Done figures disappointed yesterday, showing an accelerated -3.7% decline instead of a recovery to 2%. However, a revision to the previous month’s data helped soften the blow, as the initially reported -2.6% drop was reduced to just -0.3%. Also helping keep the Australian Dollar on an uptrend was a sharp rise in government spending on infrastructure. A record number of building approvals, including high-rise structures, suggested that the outlook for construction was strong, even if the latest figures were weak.
There is no Australian data on the calendar today.
Sterling
The Australian Dollar to Pound Sterling exchange rate weakened yesterday, even though the latest UK mortgage approvals figures disappointed. Approvals fell further than expected, hitting an 18-month low. However, several facts kept this from weighing heavily on Sterling. Firstly, given the severity of the warnings over the health of the UK property market since the Brexit vote, investors had been braced for a much worse performance. Secondly, the fall is attributed to a lull after the first-quarter rush to buy property ahead of new stamp duties being introduced on buy-to-let homes, not on the impact of the Brexit vote.
Today’s Confederation of British Industry (CBI) data may have a larger-than-usual impact upon the Pound thanks to investor desperation for any post-Brexit data that helps create a picture of the UK economy since the shock outcome of the referendum.
Euro
Finalised German GDP figures confirmed a strong rate of growth for the Eurozone’s powerhouse economy, although the Euro slumped regardless. Investors were concerned by a -1.5% drop in capital investment during the second quarter, which was -0.2% lower than forecast. Also weighing on markets was the news that the German government enjoyed an €18 billion budget surplus during the first six months of the year. With the European Central Bank (ECB) and other member states struggling to stimulate the economy, the fact that the German government is holding back investable cash is likely to cause further tensions in the currency bloc.
Important German IFO surveys are due for release later today and could boost the Euro, considering forecasts are for an increase in all three measures; Business Climate, Current Assessment and Expectations.
US Dollar
The US Dollar was in limbo yesterday, responding to strength and weakness in other currencies, but having little intrinsic momentum of its own. Traders were becoming increasingly focussed upon Friday’s speech by Federal Reserve Chair Janet Yellen at the Jackson Hole Symposium. Markets believe Yellen will signal further easing, although the Fed have disappointed previously with their more dovish-than-expected rhetoric. This uncertainty has kept appetite for the US Dollar weak as traders await further direction before adjusting their positions.
US durable goods orders, initial and continuing jobless claims and Markit Services and Composite PMIs are all due out today. This data slew has the potential to cause a significant charge or rout for the US Dollar, depending on how the figures print. With Janet Yellen’s highly-awaited speech tomorrow, poor data could cause investors to pull back from the ‘Greenback’ due to fears that it will have lowered the chances of the Fed hiking rates. Because the Jackson Hole gathering will only signal, if anything, that a rate hike could take place, poor data could negate hawkish comments by US policymakers.
Canadian Dollar
Suggestions that the recent Alberta wildfires would continue to drag on the province’s economy soured appetite for the Canadian Dollar yesterday. According to provincial government figures, the impact of the blaze was around CA$387 million, with the result that the projected deficit this year is expected to be -CA$400 million higher than initially predicted, at -CA$8.3 billion. Further weakening the ‘Loonie’ was an unexpected surge in US crude oil stocks, which pointed to weaker demand for the commodity going forwards, extending the price decline.
There is no Canadian data on the calendar today.
New Zealand Dollar
New Zealand’s trade balance for July may have severely disappointed forecasts, yet the New Zealand Dollar remained strong yesterday. After the previous month’s surplus was revised down to 110 million, the balance between exports and imports fell to a deficit of -433 million, over -100 million further than forecast. However, markets were cheered by the fact that Standard & Poor’s reaffirmed their current ratings for the New Zealand banking system. New Zealand is currently a popular haven for investors, considering the healthy returns still offered by its assets due to the strength of its interest rates when compared to the rest of the world. A healthy banking sector is vital for its perception as a safe-haven among investors.
No economic data for New Zealand is scheduled for release today.
Data Released
August 24th 18.00 EUR German IFO – Expectations (AUG) 102.4
August 24th 20.00 GBP CBI Retailing Reported Sales (AUG) 0
August 24th 20.00 GBP CBI Total Dist. Reported Sales (AUG)
August 24th 22.30 USD Durable Goods Orders (JUL P) 3.4%