Australian Dollar
The Australian Dollar grew increasingly bullish during Friday’s session as the US Dollar weakened. Traders turned to currencies like the ‘Aussie’ due to their potential to give strong returns; somewhat of a rarity on the day thanks to lacklustre trading as the markets held their breath for key US developments. There was no domestic data released during the session, although commentators continued to debate the merits of Treasurer Scott Morrison’s approach to the economy after he warned on Thursday that budget savings were necessary if Australia was to keep its credit rating intact and avoid a debt blowout.
The coming week is fairly light in terms of Australian data, with no tier one releases on the calendar, although markets will be interested in a speech on Wednesday from the Reserve Bank of Australia’s (RBA) Guy Debelle.
Sterling
The Australian Dollar to Pound Sterling exchange rate fluctuated wildly on Friday despite firm second-quarter GDP figures for the UK. In a second round of preliminary figures for the three months to June, the UK was again estimated to have experienced a 0.6% expansion on the previous quarter and a 2.2% expansion on the year. Business investment was up, but markets dismissed the data due to it having been collected largely before the results of the Brexit referendum were announced.
While there is no tier one UK data set for release this week, several upcoming releases are likely to have a marked impact upon the AUD/GBP exchange rate. Manufacturing and construction PMIs later in the week will be eagerly watched, but before that markets will want to see the outcome of Wednesday’s GfK Consumer Confidence Survey. With consumer spending seemingly holding up well in the wake of the referendum, markets will want to see improved sentiment if another Sterling sell-off is to be avoided.
Euro
Eurozone data was positive, but the Euro remained weak during Friday’s session due to the approach of key developments for the US, including high-impact growth data. The German GfK Consumer Confidence Survey surprised to the upside, with the index edging higher to clock in at 10.2 rather than remaining on hold at 10 as predicted. French GDP figures printed as forecast, showing 1.4% growth on the year in the second quarter, but 0% expansion compared to the first quarter of the year.
German inflation figures will be the first high-profile data of the week to affect the Eurozone and, potentially, the Euro. Sluggish inflation has plagued the currency bloc for some time now, so it is likely that anything other than a strong rise will sour appetite for the common currency.
US Dollar
US data was mixed before the weekend; a frustrating pattern that markets have seen numerous times in recent months. The Kansas City Fed manufacturing activity index failed to recover as far as forecast, clocking in at -4, wholesale inventories remained stagnant and GDP edged lower in the second quarter as predicted. However, the advance goods trade balance deficit shrunk more-than-expected and personal consumption strengthened.
The US Dollar remained listless until Janet Yellen spoke at the Jackson Hole Symposium, unable to find any momentum itself, reacting only to the faring of other currencies. In her long-awaited speech, Janet Yellen commented that the case for hiking interest rates had strengthened in recent months, although she attempted to reign back market expectations by including the Fed’s standard caveat that any decision would be data-dependant. This did not improve the US Dollar’s fortunes however; Yellen had repeated her trick of being cautiously optimistic in the face of market expectations of outright hawkishness.
US consumer confidence figures for August are due first thing on Wednesday and threaten headwinds for the US Dollar due to the fact that a small decline from 97.3 to 96.5 is on the cards.
Canadian Dollar
Like most currencies, the Canadian Dollar was experiencing weak demand ahead of the day’s US developments on Friday. Domestic developments were positive and crude oil was enjoying a mild recovery thanks to the weak US Dollar. Several Canadian banks reported stronger profits, which is good news considering there have been concerns over the effects of low interest rates in Canada.
Wednesday will be an important day for Canadian Dollar exchange rate movement due to the release of gross domestic product figures for June. May saw the Canadian economy contract by -0.6%, although this was partly the fault of the Alberta wildfires, so investors will need to see an improvement if the Canadian Dollar is to appreciate.
New Zealand Dollar
The New Zealand Dollar was performing bullishly in the run-up to the US data releases. As well as being boosted by weak US Dollar appetite, the ‘Kiwi’ also saw rising demand because of yesterday’s sell-off, which itself had followed a bullish appreciation earlier in the week. There was no domestic data on the calendar.
Thursday’s Terms of Trade Index for the second quarter is the most impactful data in a sparse docket for New Zealand this week.
Data Released
August 30th 22.00 EUR German Consumer Price Index (YoY) (AUG P)
August 31st 00.00 USD Consumer Confidence (AUG) 96.5
August 31st 09.05 GBP GfK Consumer Confidence Survey (AUG)
August 31st 11.00 AUD RBA’s Debelle Gives Speech
August 31st 22.30 CAD Gross Domestic Product (YoY) (JUN)
September 1st 08.45 NZD Terms of Trade Index (QoQ) (2Q)