Australian Dollar
Rising commodity prices and a bearish US Dollar offered encouragement to the ‘Aussie’ on Monday, with the latest resignation from the Trump administration prompting a fresh surge in risk appetite. Even though the chances of the administration delivering on its promised infrastructure investment look increasing slim this failed to dampen the mood of investors. However, the Australian Dollar struggled to gain traction against some of its bullish rivals as confidence in the domestic outlook remains limited.
Any strengthening of the ANZ Roy Morgan weekly consumer confidence index could increase the strength of the ‘Aussie’, at least in the short term.
Sterling
As the Rightmove house price index showed a modest uptick on the year in August this encouraged greater optimism in the health of the domestic housing market. This shored up the Pound against many of the majors, even though the monthly figure pointed towards a fresh contraction in prices. Markets were also encouraged by comments from former Treasury official Lord Macpherson, who called for the Bank of England (BoE) to put an end to its quantitative easing program.
Today’s public sector net borrowing figure could put renewed downside pressure on Sterling, however, if it points towards a continued widening of the deficit.
Euro
Relative weakness in the US Dollar helped to shore up the single currency at the start of the week, even in the absence of any fresh Eurozone data. A confident report from the Bundesbank also encouraged the Euro to trend higher, with the central bank raising its forecasts for German growth. With the Eurozone’s powerhouse economy continuing to display signs of strength the mood towards EUR exchange rates naturally improved.
Weakness could be in store for the Euro if the German ZEW economic sentiment survey for August indicates a softening in domestic confidence, though.
US Dollar
July’s Chicago Fed national activity index unexpectedly contracted, undermining confidence in the health of the US economy. This gave investors fresh reason to sell out of the ‘Greenback’ overnight, even as some of the political tensions engulfing the Trump White House seemed to be easing. The appeal of the US Dollar was also limited as anticipation for the Jackson Hole symposium began to mount, with markets awaiting the latest commentary from Federal Reserve Chair Janet Yellen.
Unless the latest US house price index shows a solid improvement on the month the US Dollar is unlikely to find a particular rallying point today.
Canadian Dollar
While Canadian wholesale sales were found to have contracted -0.5% in June in line with market expectations this still prompted the ‘Loonie’ to trend lower across the board. Investors were not impressed by this lacklustre showing, which could point towards a loss of momentum within the domestic economy. With oil prices under pressure thanks to a fresh round of profit taking there was little reason to support the Canadian Dollar at this juncture.
If tonight’s retail sales data also points towards slowing demand this could weigh heavily on the Canadian Dollar.
New Zealand Dollar
Although there was a slight easing in New Zealand credit card spending in July this was not enough to weigh down the ‘Kiwi’ at the start of the week. As consumer spending also rose on the month this suggested that the mood within the domestic economy remains positive. With risk appetite still buoyed by the weakness of the US Dollar this offered the New Zealand Dollar solid support.
Ahead of Wednesday’s raft of domestic trade data, however, NZD exchange rates are unlikely to remain on a bullish footing.
Data Released
August 22nd 09:30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index (AUG 20)
August 22nd 18:30 GBP Public Sector Net Borrowing (JUL) -0.5 billion
August 22nd 19:00 EUR German ZEW Economic Sentiment Survey (AUG) 15
August 22nd 22:30 CAD Retail Sales (MoM) (JUN) 0.2%
August 22nd 23:00 USD House Price Index (MoM) (JUN) 0.5%