Australian Dollar
While the Australian unemployment rate held steady at 5.6% in August the headline employment change figure strongly bettered expectations. An increase in the participation rate also helped to buoy the ‘Aussie’ on Thursday, dismissing worries over the resilience of the labour market. However, the Australian Dollar struggled to make particular gains on the back of this positive domestic data as the wider sense of market risk appetite remained limited.
With no fresh Australian data due for release today AUD exchange rates are unlikely to see any significant uptick, particularly if general market sentiment remains bearish.
Sterling
The Pound surged higher across the board in the wake of the Bank of England’s (BoE) September policy meeting. Although the Monetary Policy Committee (MPC) voted 7-2 in favour of leaving interest rates unchanged – disappointing investors who had hoped for a third dissenter – the tone of the minutes proved more hawkish than anticipated. As markets scrambled to price in higher odds of a November or December interest rate hike GBP exchange rates went on a bullish run, climbing to fresh multi-week highs against its rivals.
If BoE policymaker Gertjan Vlieghe maintains a more dovish stance in comments this evening, however, this could see Sterling return to a weaker footing.
Euro
In spite of some rather dovish comments from European Central Bank (ECB) policymaker Bostjan Jazbec the mood towards the single currency picked up on Thursday. Although Jazbec indicated that the ECB needs more evidence before beginning to taper its quantitative easing program this was outweighed by a lack of concern over the relative strength of the Euro. As the policymaker dismissed worries over the damage a bullish Euro could have on the domestic economy this encouraged EUR exchange rates to trend higher.
As the Eurozone trade surplus is thought to have narrowed on the month in July, though, the Euro may soon fall back out of favour.
US Dollar
Investors were pleased to find that the US consumer price index had strengthened further on the year than forecast in August, climbing from 1.7% to 1.9%. This fuelled hopes that the Federal Reserve could still be on track to raise interest rates for a third time before the end of the year. While this is not the Fed’s preferred measure of inflation this strong showing still gives policymakers further incentive to continue the tightening cycle, indicting the robust health of the US economy.
However, with forecasts pointing towards weaker advance retail sales and University of Michigan consumer confidence index results the US Dollar may struggle to hold onto its gains ahead of the weekend.
Canadian Dollar
A relatively steady Canadian new housing price index was not enough to keep the Canadian Dollar on a stronger footing overnight. The general decline in market risk appetite weighed on the ‘Loonie’, especially as the US Dollar rallied once again. Even though Brent crude broke back above the US$55 per barrel mark this failed to bolster the appeal of the commodity-correlated currency, which faces limited upside potential at this juncture.
Unless August’s existing home sales figure surprises to the upside this may not be enough to shore up CAD exchange rates today.
New Zealand Dollar
While the ANZ consumer confidence index showed a sharp uptick in September the New Zealand Dollar extended its slump. Investors failed to take particular encouragement from this even as the domestic economy continues to show signs of strengthening, in large part thanks to a sense of market risk aversion. With the odds of a December Fed interest rate hike rising the appeal of the ‘Kiwi’ naturally diminished.
Even so, if the manufacturing PMI shows a further expansion of the sector in August this may offer some support to the softened New Zealand Dollar.
Data Released
September 15th 08:30 NZD Manufacturing PMI (AUG)
September 15th 18:50 GBP BoE’s Vlieghe Speaks in London
September 15th 19:00 EUR Eurozone Trade Balance (JUL) 20.3 billion
September 15th 22:30 USD Advance Retail Sales (AUG) 0.1%
September 15th 23:00 CAD Existing Home Sales (MoM) (AUG)