Australian Dollar
The mood towards the ‘Aussie’ improved somewhat on Friday as July’s home loans data overshot market expectations. As the measure jumped 2.9% on the month, as opposed to the forecast 1.0%, this suggested that the domestic housing market is in a stronger state of health than previously thought. This also points towards a higher level of consumer confidence, boding well for the outlook of the wider Australian economy.
In the absence of any fresh domestic data the Australian Dollar may struggle to hold onto any particular gains today, though.
Sterling
While the UK construction sector showed further signs of weakness this was quickly overshadowed by better-than-expected trade and production figures. Investors were also greatly encouraged as the NIESR gross domestic product estimate for the three months to August clocked in at 0.4%. Altogether this seems to point towards the UK economy returning to a somewhat stronger footing in the third quarter, prompting the Pound to surge higher across the board ahead of the weekend.
Even so, jitters over Brexit are likely to limit the upside potential of GBP exchange rates in the near term as MPs continue to debate the crucial repeal bill.
Euro
An unexpectedly sharp narrowing of the German trade surplus returned the Euro to a downtrend on Friday, with the Eurozone’s powerhouse economy showing fresh signs of weakening. Of particular concern was the very limited uptick in exports on the month, which only rose 0.2% rather than the 1.3% that investors had hoped to see. This naturally undermined confidence in the single currency, with the initial impact of European Central Bank (ECB) President Mario Draghi’s hawkish comments fast fading.
It will be a relatively quiet start to the week for the Euro, with the single currency likely to remain under pressure without any support from fresh Eurozone data.
US Dollar
Although US wholesale inventories unexpectedly picked up in July this was not enough to particularly shore up USD exchange rates ahead of the weekend. While the latest commentary from members of the Federal Open Market Committee (FOMC) proved a little more hawkish in nature this failed to detract from the sense of uncertainty looming over the central bank. With Florida bracing for the impact of Hurricane Irma there seemed to be little particular reason to favour the ‘Greenback’.
Domestic political developments could provoke further jitters for the US Dollar tonight, particularly if the economic damage of the latest hurricane proves costly.
Canadian Dollar
Even though the Canadian unemployment rate showed a surprise dip from 6.3% to 6.2% the mood towards the ‘Loonie’ still soured. In part this was thanks to the fact that this improvement was driven purely by a sharp increase in part-time employment. As this was not quite the bullish result that the Bank of Canada (BOC) would like to see this left CAD exchange rates on a downtrend once again.
Any softening in tonight’s housing starts figure could add to the bearishness of the Canadian Dollar, in spite of the recent optimism displayed by the BOC.
New Zealand Dollar
Demand for the ‘Kiwi’ picked up in response to a positive second quarter manufacturing activity figure. As the index showed another solid improvement on the quarter this gave the New Zealand Dollar a rallying point, indicating that the domestic economy remains on a positive trajectory. With market risk appetite improving in the absence of any further deterioration in global geopolitical relations this helped NZD exchange rates to regain some of the week’s losses.
A higher level of New Zealand credit card spending would signal greater consumer confidence, boding well for the domestic outlook and offering further support to the ‘Kiwi’ today.
Data Released
September 11th 08:45 NZD Card Spending (MoM) (AUG)
September 11th 22:15 CAD Housing Starts (AUG) 217,000