Australian Dollar
Demand for the ‘Aussie’ generally weakened on Friday, with the antipodean currency lacking any particular support on a data-light day. Extra downside pressure came from news that the US Senate had voted through a budget blueprint for the 2018 fiscal year, suggesting some progress towards the Trump administration’s promised tax reforms. With market risk appetite generally limited there was little reason for investors to buy the Australian Dollar ahead of the weekend.
AUD exchange rates may struggle to find any particular traction today, with Australian data still absent from the calendar.
Pound Sterling
In something of a change for the Pound the latest UK public sector net borrowing figure bettered expectations, showing the smallest September deficit since 2007. This naturally offered a boost to Sterling, encouraging greater confidence in the economic outlook. The mood towards the Pound improved further as EU leaders announced that they will begin preparations for the second round of Brexit negotiations, although no date was set for the start of those talks.
Today’s CBI business optimism index and industrial orders data could see Sterling extend its gains further, even though some element of Brexit-based uncertainty is likely to persist.
Euro
While German producer prices bettered forecast in September, rising 3.1% on the year, this failed to encourage particular Euro bullishness. Even though this does suggest that inflationary pressure is continuing to build within the Eurozone’s powerhouse economy this is still unlikely to be enough to cause a shift in the European Central Bank’s (ECB) outlook. Some jitters remained over the Catalan crisis, even as the Spanish government moved closer towards invoking direct rule over the region.
Any improvement in tonight’s Eurozone consumer confidence index may help to shore up the Euro, however.
US Dollar
Hopes that tax reform may still be on the horizon kept the US Dollar trending higher across the board, even though opposition to the Trump administration’s plans remain. Confidence in the ‘Greenback’ improved further in response to an unexpected rebound in September’s existing homes sales data. This suggests that the US housing market is in a stronger state than previously thought, which is likely to give the Federal Reserve greater incentive to raise interest rates imminently.
An uptick in the Chicago Fed National Activity Index could extend the ‘Greenback’ uptrend today.
Canadian Dollar
The mood towards the Canadian Dollar deteriorated significantly during Friday’s European session, with investors disappointed by September’s consumer price index data. Inflation failed to accelerate as far as forecast, clocking in at 1.6% on the year rather than 1.7%. Coupled with a surprise contraction in retail sales this left the ‘Loonie’ generally out of favour, even as oil prices remained relatively buoyant.
Any softening in August’s wholesale sales figure may put further pressure on CAD exchange rates, with the chances of the Bank of Canada (BOC) returning to a hawkish bias continuing to fade.
New Zealand Dollar
Political jitters continued to weigh on the New Zealand Dollar, with markets still distinctly unsettled by the prospect of the Labour-New Zealand First coalition government. As the economic agenda is likely to see a radical shift under the country’s new leadership the ‘Kiwi’ has struggled to find any support. While credit card spending rebounded on the month in September this failed to ignite a NZD rally.
Some of the initial bearishness that greeted the announcement of the new government is likely to fade over the course of the day, though, paving the way for the New Zealand Dollar to recover some of its losses. Data Released
October 23rd 20:00 GBP CBI Business Optimism Index (Q4) 4
October 23rd 20:00 GBP CBI Industrial Trends Orders (OCT) 5
October 23rd 22:30 CAD Wholesale Sales (MoM) (AUG)
October 23rd 22:30 USD Chicago Fed National Activity Index (SEP)
October 24th 00:00 EUR Eurozone Consumer Confidence (OCT) -1