Australian Dollar
Demand for the ‘Aussie’ remained somewhat limited yesterday after July’s private sector credit data showed an unexpected dip on the year. This suggests that confidence within the Australian economy has eased, even though the second quarter private capital expenditure figure bettered forecast. With market risk appetite still rather muted thanks to global geopolitical tensions and a recovering US Dollar this left AUD exchange rates lacking in any particular support.
Any weakening from this morning’s manufacturing PMI could extend the losses of the Australian Dollar heading into the weekend.
Sterling
Brexit-based jitters did not ease as the latest round of talks concluded, with investors discouraged by the tone of chief EU negotiator Michel Barnier. As no significant progress appeared to have been made on key issues the odds of the UK exiting the EU without any alternative arrangements in place were seen to rise. This overshadowed a surprise improvement in the GfK consumer confidence index, which still remains in negative territory thanks to the persistent uncertainty of the domestic outlook.
As the UK manufacturing PMI is forecast to show a modest dip on the month this is likely to add to the bearish mood of the Pound today.
Euro
An unexpectedly strong uptick in the Eurozone consumer price index failed to boost the Euro. As this rise in inflationary pressure was largely attributable to a sharp jump in energy prices investors took little encouragement from the bullish result. With European Central Bank (ECB) policymakers still likely to look through this transitory boost to inflation the likely timing of any tapering of the quantitative easing program remains questionable at best.
Today’s finalised Eurozone manufacturing PMIs are not likely to provoke any particular volatility for EUR exchange rates, unless the data sees a significant revision.
US Dollar
There were no surprises from July’s US personal consumption expenditure overnight, preventing the US Dollar from embarking on a fresh bullish run across the board. As the core PCE figure eased on the year this added to doubts that the Federal Reserve will be able to manage a third interest rate hike before the end of the year. Even so, as the latest raft of jobless claims figures proved bullish USD exchange rates were able to hold onto some of their recent gains.
Increased volatility can be expected this evening on the back of August’s non-farm payrolls report, with further US Dollar strength likely if the headline figure proves positive.
Canadian Dollar
With Texas oil production still shut down as a result of Hurricane Harvey and its aftermath the price of Brent crude continued to climb overnight. This helped to boost the Canadian Dollar, especially as June’s gross domestic product data also bettered expectations. As the Canadian economy continued to run at a strong pace, with growth clocking in at 4.3% on the year, confidence in the domestic outlook naturally improved.
If August’s manufacturing PMI also points towards more robust economic health this could see the Canadian Dollar ending the week on a bullish run.
New Zealand Dollar
The mood towards the ‘Kiwi’ soured significantly on Thursday after Labour took the lead over the National Party in an opinion poll for the first time in twelve years. This prompted an increased bout of jitters for the New Zealand Dollar, suggesting that the outcome of the election may still surprise markets. As the wider sense of risk appetite also cooled this left NZD exchange rates on a sharp downtrend.
As the second quarter terms of trade index is expected to show a moderate dip on the quarter this may add to the softness of the ‘Kiwi’ this morning.
Data Released
September 1st 08:45 NZD Terms of Trade Index (QoQ) (2Q) 3.0%
September 1st 09:30 AUD Manufacturing PMI (AUG) 55.8
September 1st 17:55 EUR German Manufacturing PMI (AUG F) 55.8
September 1st 18:30 GBP Manufacturing PMI (AUG) 55
September 1st 22:30 USD Change in Non-Farm Payrolls (AUG) 180,000
September 1st 23:30 CAD Manufacturing PMI (AUG) 55.4