Australian Dollar
A solid uptick in the Westpac consumer confidence index for September helped to shore up the ‘Aussie’, although the measure still remains in relatively weak territory. This suggested that the mood within the domestic economy is improving, boding well for consumer spending and the wider economic outlook. However, as markets started to brace for this morning’s labour market data the upside potential of the Australian Dollar was still somewhat limited.
If the unemployment rate holds steady at 5.6% in line with market expectations this could offer some support to AUD exchange rates, although any softness in the data may provoke a fresh slump.
Sterling
Disappointment was in store for markets as the UK average weekly earnings data failed to strengthen in line with forecasts. As wage growth only edged up by 2.1% in the three months to August this undermined hopes that the Bank of England (BoE) could shift to a more hawkish policy outlook. With inflation still significantly outpacing wages UK households look set to see a deepening financial squeeze, potentially weighing on wider economic activity.
Should BoE Chief Economist Andy Haldane break ranks and vote in favour of an interest rate hike tonight this could see the Pound strengthening sharply across the board.
Euro
Demand for the Euro remained relatively limited on Wednesday, with investors unimpressed by the latest Eurozone industrial production figures. While output picked up in July this was not enough to encourage greater confidence in the underlying health of the domestic economy. The relative strength of the US Dollar also weighed on the single currency, with markets seeing little reason to favour the Euro at this juncture.
With fresh domestic data lacking today EUR exchange rates are likely to lack any particular traction, particularly as hopes of an imminent return to hawkishness from the European Central Bank (ECB) have faded.
US Dollar
Even though the latest US producer price index data proved rather lacklustre this failed to particularly dent the ‘Greenback’. Markets continued to take a relatively optimistic view of the US Dollar in the wake of Hurricane Irma, particularly as the Trump administration made fresh noises on tax reform. The prospect of Trump actually delivering on his much-anticipated tax measures set a fire under USD exchange rates, encouraging investors to pile back into the US Dollar.
Volatility could be in store for the ‘Greenback’ tonight, though, with the release of August’s consumer price index report, which could fuel bets over the possibility of a December interest rate hike from the Federal Reserve.
Canadian Dollar
Comments from Canadian Finance Minister Bill Morneau encouraged the ‘Loonie’ to make further gains as he expressed comfort in the relative strength of the currency. This helped to offset the impact of a larger-than-expected increase in US crude oil inventories over the last week. With Brent crude still trending solidly above the US$54 per barrel mark the mood of oil markets has remained relatively upbeat, even as the global oversupply glut lingers.
A strong showing from July’s new housing price index could bolster the Canadian Dollar further, with a robust housing market boding well for the wider economy.
New Zealand Dollar
Although the New Zealand food price index improved on the month in August this was not enough to keep the ‘Kiwi’ on a stronger footing. Even though this suggested an improvement in inflationary pressure concerns over the underlying health of the economy remain. Ongoing market jitters over the upcoming election also continued to limit the appeal of the New Zealand Dollar, with Labour continuing to poll strongly.
If the ANZ consumer confidence index shows an uptick on the month this may help to shore up NZD exchange rates this morning.
Data Released
September 14th 11:00 NZD ANZ Consumer Confidence Index (SEP)
September 14th 11:00 AUD Unemployment Rate (AUG) 5.6%
September 14th 21:00 GBP Bank of England Rate Decision 0.25%
September 14th 22:30 CAD New Housing Price Index (YoY) (JUL)
September 14th 22:30 USD Consumer Price Index (YoY) (AUG) 1.8%