Australian Dollar
As September’s Australian construction PMI dipped from 55.3 to 54.7 this left the ‘Aussie’ on a softer footing against its rivals. Even though the sector remains in a solid state of growth the mood towards the antipodean currency still soured, with markets increasingly jittery over the strength of the domestic outlook. With the general sense of risk appetite also limited there was little reason to buy into the Australian Dollar ahead of the weekend.
Any deterioration in Australia’s foreign reserves could put further pressure on AUD exchange rates today.
Sterling
Even though the Halifax house price index surprised to the upside the Pound was unable to capitalise on this positive showing. While the UK housing market demonstrated fresh signs of resilience investors were more concerned by the ongoing signs of disarray within the Conservative Party. As a number of MPs are reportedly planning to ask Theresa May to step down Sterling remained under pressure, continuing to suffer from political headwinds.
Unless May can regain the support of her party and the confidence of markets then the Pound is likely to remain biased to the downside this week.
Euro
German factory orders were found to have soared in August, rising 7.8% on the year and significantly surpassing forecasts. This prompted investors to pile into the Euro once again, with the Eurozone’s powerhouse economy continuing to demonstrate signs of resilience. Although tensions between the Spanish and Catalan administrations escalated further this failed to particularly weigh on the single currency during Friday’s European session.
Even if German industrial production picks up this afternoon, though, the Euro could still falter in response to the latest developments in the Catalan crisis.
US Dollar
September’s hurricane season had a more marked impact on the month’s US labour market data than markets had anticipated, resulting in a surprise fall of -33,000. However, this was not enough to knock the US Dollar off its bullish run as investors predicted that the headline figure will rebound in October. The latest wage growth data also proved rather more encouraging, boosting hopes that the Federal Reserve will raise interest rates again before the end of the year.
However, with high odds of an imminent rate hike already priced into the ‘Greenback’ the upside potential of USD exchange rates is likely to be limited in the near term.
Canadian Dollar
Although September’s Canadian labour market data was not overly impressive the ‘Loonie’ was still able to return to a stronger footing. Investors took some confidence from the fact that there had been a solid increase in full-time employment on the month, boding well for the domestic outlook. With a number of oil platforms in the Gulf of Mexico being shut down in anticipation of the latest tropical storm this keep oil prices buoyant.
In the absence of any fresh domestic data the appeal of the Canadian Dollar could diminish at the start of the week.
New Zealand Dollar
The persistent sense of New Zealand political uncertainty kept the ‘Kiwi’ on a downtrend ahead of the weekend, with the post-election gridlock showing no real signs of easing. With markets still confident that the Federal Reserve will raise interest rates again soon there was little to recommend the New Zealand Dollar.
Unless there are signs of stability returning to the domestic political landscape then NZD exchange rates are likely to remain on a softer trend.
Data Released
October 9th 15:30 AUD Foreign Reserves (SEP)
October 9th 16:00 EUR German Industrial Production (YoY) (AUG)