Australian Dollar
The Australian Dollar was weakened by cold risk appetite on Friday, falling against the other majors. The ‘Aussie’ was not quite as exposed to trader desertion as its commodity peers, racking up strong gains verses the New Zealand Dollar and the Canadian Dollar, as well as the floundering Pound Sterling. There was no domestic data on the calendar to provide support.
There is little on the data calendar for Australia this week, with perhaps the biggest ‘Aussie’ movements likely to be caused by the Chinese manufacturing PMI for September on Friday.
Sterling
There was no UK data released on Friday, but the Australian Dollar was able to rack up bullish gains after comments from Boris Johnson. The Foreign Secretary stated that the UK government was currently working on a formal letter to trigger Article 50 of the Lisbon Treaty and that he expected the exit process would be initiated early in 2017. The negotiation period is feared to bring a large amount of uncertainty over the UK’s economic outlook, so the indication it could kick off soon startled investors, who promptly sold out of the Pound.
There is plenty of housing market data due out for the UK during the coming days, with consumer confidence on Friday also likely to be a key release.
Euro
Eurozone data was mixed on Friday, but Thursday’s suggestion by the European Central Bank (ECB) bulletin that the Governing Council was not looking to ease policy further kept the Euro on the rise. French PMIs all rose above forecast, with the weak manufacturing sector nearly climbing out of contraction territory. GDP figures weren’t so positive, with revised final estimates showing a -0.1% contraction on the month and 1.3% growth on the year; ten basis points lower than earlier projections in both cases. Manufacturing was strong across the Eurozone, but other PMIs weakened further-than-expected. Most notable was the German services reading, which slumped to 50.6 – only just above contraction territory. Regardless, the Euro remained positive.
There are several high-profile Eurozone data releases on the calendar this week, but on Friday the latest consumer price index figures have the potential to cause significant Euro volatility.
US Dollar
By Friday markets had recovered from the disappointment of the week’s rate hold from the Federal Reserve. The US Dollar began to climb higher, rising on the back of high hopes for a December rate hike, as was signalled by Janet Yellen in the press conference following the Federal Open Market Committee (FOMC) policy meeting. On Friday Eric Rosengren, the Boston Fed President, argued that the labour market would soon reach a state where unemployment was unsustainably low – therefore interest rates needed to be gradually increased, starting soon. Rosengren was one of three policymakers to vote in favour of a rate hike at last week’s policy meeting.
Investors will be interested to see on Wednesday how durable goods orders have fared after last month’s strong 4.4% gains; a -1% decline is forecast this time around.
Canadian Dollar
The latest Canadian data significantly disappointed economist’s projections, weakening the outlook for the economy and causing the Canadian Dollar to extend the slump started earlier in the session. Chief amongst the data were the latest CPI readings, with non-core inflation weakening unexpectedly from 1.3% to 1.1% instead of rising to 1.4%, while core price growth dropped further-than-anticipated, hitting 1.8% after July’s 2.1% increase. This, combined with Thursday’s Organisation for Economic Co-operation and Development (OECD) report, suggesting Canadian GDP would be lower than in 2015, left the ‘Loonie’ in a weakened state against many of its peers.
Once again markets will have to wait until Friday for any sizeable Canadian data, when July’s GDP figures are set for release.
New Zealand Dollar
With the US Dollar on the rise, risk appetite was weak on Friday, leaving the New Zealand Dollar to tumble against its currency peers. The ‘Kiwi’ slumped despite positive news from New Zealand’s dairy industry. Fonterra, the world’s largest exporter of dairy, reported a 65% increase in its net profits for the 2015-16 financial year, improving the outlook for the dairy industry and New Zealand’s farmers; many of whom are still struggling with high debts caused by the slump in milk prices. With no domestic ecostats on the calendar, investors took the opportunity to take profit on the strong ‘Kiwi’.
New Zealand business confidence data is due for release on Friday.
Data Released
September 28th 22.30 USD Durable Goods Orders (AUG P) -1% September 30th 07.45 NZD Building Permits (MoM) (AUG) September 30th 09.01 GBP GfK Consumer Confidence Survey (SEP) September 30th 11.00 CNY Manufacturing PMI (SEP) September 30th 19.00 EUR Eurozone Consumer Price Index Estimate (YoY) (SEP) September 30th 22.30 CAD Gross Domestic Product (YoY) (JUL)