Australian Dollar
The mood towards the Australian Dollar was relatively mixed at the start of the week, with a lack of fresh domestic data limiting the momentum of the antipodean currency. A sharp softening of September’s Chinese house price index put some degree of downside pressure on the ‘Aussie’, undermining recent optimism in China’s economic outlook. With market risk appetite relatively limited this left AUD exchange rates struggling to find any real traction on Monday.
An uptick in the ANZ Roy Morgan weekly consumer confidence index could see the Australian Dollar return to an uptrend, however.
Sterling
Confidence in the Pound faltered in response to a surprise slump in the CBI business optimism index, which fell from 5 to -11 in October. This weaker showing suggests that the domestic outlook is rather weaker than previously thought, boding ill for upcoming gross domestic product data. However, Sterling soon recovered some of its lost ground thanks to lingering relief that Brexit negotiations have started to progress somewhat and hawkish Bank of England (BoE) comments.
Even so, with no fresh UK data due for release today GBP exchange rates may struggle to hold onto any particular bullishness.
Euro
Although October’s Eurozone consumer confidence index bettered expectations, clocking in at -1.0 rather than -1.1, this failed to give the Euro much of a boost against its rivals. Markets were instead more concerned by the latest developments in the Catalan crisis, with the regional administration still expressing defiance. With the situation showing no signs of deescalating any time soon this naturally limited the appeal of the single currency.
The latest raft of Eurozone manufacturing and services PMIs could encourage greater demand for the Euro today, though, providing that the domestic economy continues to demonstrate signs of resilience.
US Dollar
An improvement in the Chicago Fed national activity index offered additional support to the ‘Greenback’, adding to the generally positive picture that recent data has painted. Investors were also encouraged by reports that the Trump administration will soon announce its choice for the new Chair of the Federal Reserve. With the central bank looking set to return to a monetary tightening bias regardless of the decision there was little reason to sell out of the US Dollar at this juncture.
Even so, the US Dollar remains vulnerable to downside pressure if tonight’s manufacturing and services PMIs prove disappointing.
Canadian Dollar
August’s Canadian wholesale sales saw a marked slowing on the month, easing from growth of 1.7% to just 0.5%. This is likely to add to the more cautious current mood of the Bank of Canada (BOC), giving policymakers further incentive to leave interest rates on hold for the foreseeable future. Even though oil continued to trend solidly this was not enough to support the commodity-correlated ‘Loonie’.
This bearish mood is likely to persist over the course of the day, especially if oil comes under renewed pressure.
New Zealand Dollar
After the significant losses seen in the wake of the news that a Labour-New Zealand First coalition would be taking power the ‘Kiwi’ found some support on Monday. Markets are still wary of this new centre-left government, however, keeping NZD exchange rates from seeing any significant rebound. A generally muted sense of risk appetite also limited the upside potential of the New Zealand Dollar, in spite of its return to an uptrend.
Political jitters are still likely to dominate the mood towards the ‘Kiwi’ today, with the shape of the new cabinet yet to be made clear.
Data Released
October 24th 08:30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index
October 24th 17:00 EUR German Manufacturing PMI (OCT) 60
October 24th 17:00 EUR German Services PMI (OCT) 55.5
October 24th 23:45 USD Manufacturing PMI (OCT) 53.2
October 24th 23:45 USD Services PMI (OCT) 55.1