Australian Dollar
In the absence of any fresh North Korean missile tests the general sense of market risk appetite picked up once again. This offered support to the Australian Dollar at the start of the week, although the antipodean currency struggled to gain ground against some of its more bullish rivals. With markets showing an increasing lack of concern over simmering tensions surrounding the Korean peninsula, though, the downside potential of the ‘Aussie’ looks somewhat limited at this juncture.
The minutes for the Reserve Bank of Australia’s (RBA) September meeting could offer AUD exchange rates stronger support, providing policymakers continue to sound a relatively upbeat message.
Sterling
A fresh row over Brexit put pressure on the Pound yesterday, with Foreign Secretary Boris Johnson once again citing the debunked 350-million-a-week figure. Naturally this highlighted the persistent divisions within the Conservative government, raising concerns that the UK could still be in for a disorderly exit from the EU. Signs of a slowing housing market gave investors further reason to sell out of Sterling, with the latest Rightmove house price index proving disappointing.
As the impact from the Bank of England’s (BoE) hawkish meeting minutes fades the upside potential of the Pound is likely to remain rather limited.
Euro
Although there was no surprise from the finalised Eurozone consumer price index data for August this still encouraged the Euro to go on a bullish run across the board. While European Central Bank (ECB) policymakers have expressed concerns over the potentially transitory nature of this uptick in inflationary pressure this was not enough to prevent EUR exchange rate gains. A solid widening of the Italian trade surplus also helped to boost the appeal of the single currency.
An improvement in the ZEW economic sentiment surveys for Germany and the Eurozone as a whole could encourage further demand for the Euro today.
US Dollar
Hopes over the prospect of the Trump administration delivering on its promised tax reforms shored up the US Dollar at the start of the week. Even though recent US economic data has been less-than-encouraging markets are also continuing to speculate over the likelihood of the Federal Reserve raising interest rates again before the end of the year. While the NAHB housing market index surprised to the downside overnight this failed to particularly impact USD exchange rates.
A rebound in housing starts on the month in August could boost the ‘Greenback’ further, although jitters are likely to increase ahead of the latest Fed policy meeting.
Canadian Dollar
The ‘Loonie’ lacked any particular momentum at the start of the week, even with the general improvement in market risk appetite. As US refineries and rigs continued to come back online in the wake of Hurricane Harvey this prompted a modest dip in oil prices. Even so, as Brent crude continued to trend above the $US55 per barrel mark the Canadian Dollar remained on a relatively steady footing against many of the majors.
Another contraction in Canadian manufacturing sales could weigh heavily on the ‘Loonie’ tonight, though.
New Zealand Dollar
Confidence in the ‘Kiwi’ strengthened sharply in response to August’s New Zealand services PMI, which rose from 56 to 57.3. This indicated that the service sector had continued to expand at a decent rate, matching the strength of the corresponding manufacturing PMI. As a result investors were inclined to take a more optimistic view of the domestic economy, increasing demand for the New Zealand Dollar.
If the third quarter Westpac consumer confidence index shows a similar improvement this could see NZD exchange rates extend their gains further this morning.
Data Released
September 19th 08:00 NZD Westpac Consumer Confidence (3Q)
September 19th 11:30 AUD RBA September Meeting Minutes
September 19th 19:00 EUR German ZEW Economic Sentiment Survey 12
September 19th 22:30 CAD Manufacturing Sales (MoM) (JUL) -0.7%
September 19th 22:30 USD Housing Starts (MoM) (AUG) 1.7%