Australian Dollar
Although the NAB business confidence index showed a decent uptick on the month this was not enough to significantly bolster the Australian Dollar. While a stronger ANZ Roy Morgan weekly consumer confidence index also pointed towards a higher level of domestic optimism the appeal of the ‘Aussie’ remained rather muted. With markets still largely unconvinced by the underlying strength of the Australian economy the upside potential of AUD exchange rates appears limited at this juncture.
Even so, a similarly strong showing from today’s Westpac consumer confidence index could offer the Australian Dollar some measure of support.
Sterling
The latest raft of UK data proved distinctly mixed, diminishing the appeal of the Pound. While industrial and manufacturing production strengthened solidly in August this was offset by a surprisingly sharp widening of the trade deficit. However, as the NIESR gross domestic product for the three months to September pointed towards growth of 0.4% this limited any downside pressure on Sterling. Altogether the outlook for the UK economy is still rather uncertain, especially as Brexit talks continue.
Any signs that the latest round of negotiations are making progress could boost GBP exchange rates, although the prospect of any major breakthrough remains slim.
Euro
In another positive sign for the wider Eurozone the German trade surplus widened from 19.3 billion to 20.0 billion in August. With the German economy still motoring along strongly the European Central Bank (ECB) has cause for confidence, raising the prospect of a shift to a more hawkish policy outlook. As tensions in the Catalan crisis appeared to have temporarily stabilised investors continued to pile back into the Euro during Tuesday’s European session.
Even so, if the political situation shows any signs of deterioration then the single currency could slump sharply.
US Dollar
September’s NFIB small business optimism index proved softer than forecast, leaving the US Dollar on a weaker footing overnight. Markets were not impressed to see this latest sign of weakness within the world’s largest economy, even though the odds of an imminent Federal Reserve interest rate hike remain elevated. After the recent bullishness of USD exchange rates this disappointing showing left the ‘Greenback’ vulnerable to a fresh bout of downside pressure.
However, commentary from members of the Federal Open Market Committee (FOMC) may help to shore up the US Dollar tonight if policymakers maintain a generally hawkish tone.
Canadian Dollar
August’s Canadian building permits figure failed to impress, contracting -5.5% on the month as the domestic housing market continues to struggle. This weighed on the ‘Loonie’ overnight, with the Bank of Canada (BOC) looking set to leave monetary policy on hold for the foreseeable future. However, as oil prices strengthened on the back of the latest commentary from OPEC officials the Canadian Dollar held onto a stronger footing against some of its rivals.
With markets likely to drive oil prices lower again once another bout of profit taking kicks in the ‘Loonie’ may soften further today.
New Zealand Dollar
As retail card spending did not pick up as forecast in September this left the ‘Kiwi’ trending lower against the majors. With consumer confidence showing no real signs of improvement on the month this dented optimism in the economic outlook, encouraging further selling of the New Zealand Dollar.
This morning’s ANZ truckometer reading could offer NZD exchange rates a rallying point, though, if it points towards an uptick in inflationary pressure.
Data Released
October 11th 07:00 NZD ANZ Truckometer Heavy (MoM) (SEP)
October 11th 09:30 AUD Westpac Consumer Confidence Index (OCT)
October 12th 04:00 USD Federal Open Market Committee Meeting Minutes (SEP 20)