Australian Dollar
The Australian Dollar was performing well yesterday, advancing due to market uncertainty ahead of the US presidential election debate. Risk-appetite was on thanks to the potential for Donald Trump – an unpopular choice from the point of view of investors – to gain new supporters with his fiery rhetoric. Domestically, there was little to encourage support for the Australian Dollar, although the hunt for yield saw investors overlooking suggestions that China’s official ecostats could be masking an economic slowdown.
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
Brexit fears were once again weighing on Pound Sterling, allowing the AUD/GBP exchange rate to advance. Traders were becoming increasingly concerned that the UK government may opt for a ‘hard Brexit’, which would see the country sacrifice single market access in order to better control immigration. This was clearly weighing on the financial sector, with sentiment among firms posting the longest consecutive decline – nine months – since the 2009 financial crash. The rate of mortgage approvals fell to a 19-month low as well, further weakening appetite for Pound Sterling.
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
Strong German IFO sentiment scores helped to lessen fears that Germany has gone from being a driver to a drag for the Eurozone economy. Business climate and current assessment results were expected to creep higher, but instead rose from 106.2 to 109.5 and from 112.8 to 114.7 respectively. Expectations had been forecast to hold at 100.1, but instead rose to 104.5. This improved the outlook for the German economy in the fourth quarter, suggesting the recent run of poor data could have been more of a dip than evidence of a slowdown.
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
There was no US data on the calendar during yesterday’s Australian session, although with the presidential debate approaching any ecostats may have been largely ignored had they been released. Trump’s economic policies, in particular his intention to impose heavy tariffs on Chinese goods, are considered by the markets to be negative for the US economy’s outlook. Trader fears that Trump may manage to garner enough support to put him level with, or ahead, of narrowly-leading Hillary Clinton in the polls kept appetite for the US Dollar weak.
Investors will be interested to see on Wednesday how durable goods orders have fared after last month’s strong 4.4% gains; a -1.5% decline is forecast this time around.
Canadian Dollar
Oil was making a strong rise yesterday, but the Canadian Dollar was largely on the decline. This was partly due to the fact that markets were divided on the odds of a successful meeting from the Organisation for the Petroleum Exporting Countries (OPEC). Although there has been talk of some kind of efforts to reduce production from the cartel, traders have been disappointed on numerous occasions before.
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
Weak trade figures had little lasting effect on the New Zealand Dollar yesterday, with the ‘Kiwi’ remaining strong despite a significant widening of the trade deficit. The overall trade balance, previously -433 million, widened to -1265 million; a near threefold increase. This took the year-to-date trade balance down to -3131 million, despite forecasts for a narrowing from -3034 million to -2675 million. The New Zealand Dollar held its gains on US Dollar weakness, however, with the worst performance recorded against the majors being the ‘Kiwi’s trade around opening levels versus the Euro.
New Zealand business confidence data is due for release on Friday.
Data Released
September 28th 22.30 USD Durable Goods Orders (AUG P) -1.5%
September 30th 07.45 NZD Building Permits (MoM) (AUG)
September 30th 09.01 GBP GfK Consumer Confidence Survey (SEP) -5
September 30th 11.00 CNY Manufacturing PMI (SEP)
September 30th 19.00 EUR Eurozone Consumer Price Index Estimate (YoY) (SEP) 0.4%
September 30th 22.30 CAD Gross Domestic Product (YoY) (JUL) 1.0%