Australian Dollar
The mood towards the ‘Aussie’ was somewhat mixed on Tuesday, with positive Australian data contrasted against disappointing Chinese trade figures. As both iron ore and coal imports to China were found to have diminished sharply on the month the appeal of the commodity-correlated Australian Dollar was dented. However, a solid uptick in the NAB business confidence index helped to shore up the antipodean currency as the domestic economy continued to demonstrate signs of resilience.
A similarly positive performance from the Westpac consumer confidence index could encourage greater demand for the Australian Dollar.
Sterling
As fresh arguments over the Conservative minority government’s approach to Brexit negotiations erupted the Pound extended its downtrend across the board. With any sense of clarity decidedly lacking there has been little reason for investors to have any particular confidence in Sterling at this juncture. A modest dip in the growth of the British Retail Consortium (BRC) like-for-like sales data did not offer GBP exchange rates any real rallying point.
In the absence of any fresh UK data today the Pound is likely to remain under pressure as a result of Brexit-based market jitters.
Euro
Although the German trade surplus widened modestly from 22 billion to 22.3 billion in June this failed to encourage any significant gains for the Euro. Investors were somewhat concerned by an unexpected 2.8% contraction in exports, which was only offset by an even sharper decline in import volumes. This did not paint the most encouraging picture of the health of the Eurozone’s powerhouse economy, increasing speculation that its previously robust growth is beginning to falter.
With Eurozone data thin on the ground during the remainder of the week EUR exchange rates may struggle to hold onto their relative strength for long.
US Dollar
Confidence in the US Dollar remained bullish overnight, with the NFIB small business optimism index pointing towards a solid improvement in domestic sentiment. While this was not enough to boost the likelihood of the Federal Reserve raising interest rates again before the end of the year investors were still encouraged by this positive showing. General demand for safe-haven assets also helped to buoy the ‘Greenback’, with global geopolitical tensions still heightened.
However, if US mortgage applications continued to decline in the last week this could take some of the wind out of the US Dollar’s sails tonight.
Canadian Dollar
News that Chinese demand for oil fell in June did not offer the Canadian Dollar much cause for confidence. However, the ‘Loonie’ was able to gain traction against many of the majors overnight by capitalising on the weakness of its rivals. Even though oil prices remain vulnerable this was not enough to hamper CAD exchange rates on Tuesday.
As forecasts point towards a deterioration in the latest Canadian housing market data, though, demand for the Canadian Dollar could soon weaken once again.
New Zealand Dollar
Risk aversion continued to weigh on the ‘Kiwi’, with the antipodean currency continuing to lack any support from domestic data. With markets already bracing for tomorrow’s Reserve Bank of New Zealand (RBNZ) policy meeting New Zealand Dollar remains largely biased to the downside. As expectations are for policymakers to take a more dovish view on monetary policy the appeal of the ‘Kiwi’ is likely to remain decidedly limited.
Even so, any improvement in market risk sentiment could offer NZD exchange rates some degree of support in the short term.
Data Released
August 9th 10:30 AUD Westpac Consumer Confidence Index (AUG) 97.8
August 9th 11:30 AUD Home Loans (JUN) 1.5%
August 9th 21:00 USD MBA Mortgage Applications (AUG 04)
August 9th 22:15 CAD Housing Starts (JUL) 205,000
August 9th 22:30 CAD Building Permits (MoM) (JUN) -1.9%