Australian Dollar
Although Reserve Bank of Australia (RBA) Governor Philip Lowe acknowledged that the next move in interest rates is more likely to be up than down the Australian Dollar remained on a weaker footing. The overall tone of Lowe’s comments remained rather dovish, with the policymaker offering a fresh warning over the relative strength of the ‘Aussie’. Coupled with market jitters over the escalating situation between the US and North Korea this left AUD exchange rates under pressure ahead of the weekend.
If June’s credit card purchases data points towards an uptick in consumer spending this could encourage investors to buy back into the Australian Dollar today.
Sterling
Confidence in the Pound struggled to pick up in the wake of Thursday’s disappointing NIESR gross domestic product estimate. With the prospect of a 2017 interest rate hike from the Bank of England (BoE) looking even more distant investors saw little particular reason to buy into Sterling at this juncture. Even so, as the Pound is considered to be a less risky asset than some of its rivals it was still able to benefit from the rather bearish mood of global markets.
Ahead of tomorrow’s UK consumer price index data the appeal of the Pound is likely to remain limited, with investors wary of any weakening of inflationary pressure.
Euro
Confirmation that German inflationary pressure had risen in July helped to bolster EUR exchange rates, even though inflation in other parts of the Eurozone proved weaker. Even so, the European Central Bank (ECB) is unlikely to take this as a sign that monetary tightening needs to come sooner rather than later. With global geopolitical tensions showing no signs of easing the Euro remains under some degree of pressure, although its potential for further losses appears limited at this juncture.
As forecasts point towards a slowing in Eurozone industrial production the Euro could soon return to a downtrend against its rivals.
US Dollar
Safe-haven demand continued to shore up the US Dollar on Friday, with investors increasingly nervy of the prospect of the US and North Korea entering into an armed conflict. However, July’s US consumer price index proved discouraging, eroding some of the latest gains of USD exchange rates. Inflation failed to pick up as far as forecast on both the year and the month, undermining the case for the Federal Reserve to raise interest rates again before the end of the year.
In the absence of any fresh US data the ‘Greenback’ may start the week on a relatively bearish footing, unless political tensions continue to ratchet higher.
Canadian Dollar
As the International Energy Agency (IEA) reported that oil stockpiles in industrialised nations had fallen below their 2016 levels the Canadian Dollar found support. However, the IEA warned that the rebalancing process is still moving relatively slowly. As there have been signs of members of the OPEC-led production limiting agreement losing some of their resolve to adhere to targets the market remains rather fragile.
If oil prices deteriorate once again this could weigh heavily on the commodity-correlated Canadian Dollar.
New Zealand Dollar
While the New Zealand manufacturing PMI softened slightly on the month this failed to keep the ‘Kiwi’ on a downtrend on Friday. Even though the general sense of market risk appetite persisted the mood towards the New Zealand Dollar improved, largely thanks to technical support. Given the recent weakness of NZD exchange rates investors were encouraged to pile back into the currency, especially after US data proved disappointing.
A solid performance from this morning’s services PMI or retail sales figures could offer the New Zealand Dollar a stronger boost.
Data Released
August 14th 08:30 NZD Services PMI (JUL) 57.8
August 14th 08:45 NZD Retail Sales Ex Inflation (QoQ) (2Q) 0.9%
August 14th 11:30 AUD Credit Card Purchases (JUN)
August 14th 19:00 EUR Eurozone Industrial Production (YoY) (JUN) 2.9%