Latest RBA Comments Fail to Weigh Down Australian Dollar
The Australian Dollar remained on a positive footing at the start of the week, even though Reserve Bank of Australia (RBA) Governor Philip Lowe maintained a dovish outlook. While markets continued to price in higher odds of the RBA cutting interest rates again before the end of the year, potentially more than once, this was not enough to hold AUD exchange rates down. Instead, the antipodean currency benefitted from the relative weakness of the US Dollar overnight.
Further comments from RBA policymakers in the near future could help to limit the upside potential of the Australian Dollar, though.
Pound Remains Under Pressure from Politics
Political anxiety kept the Pound under pressure yesterday as the Conservative leadership contest continued apace. As reports suggested that a number of Conservative MPs are planning to rebel against Boris Johnson’s stance on Brexit the prospect of further uncertainty weighed heavily on GBP exchange rates. With markets still speculating over which of the two final candidates will replace Theresa May the appeal of the Pound remained limited.
This evening’s CBI reported sales index could offer GBP exchange rates a boost if signs point towards a greater level of domestic spending and confidence.
Mixed German Business Sentiment Limits Euro Appeal
June’s German IFO business sentiment survey proved rather mixed in nature, limiting the strength of the Euro overnight. Although the headline current assessment index showed a surprise improvement on the month this was balanced out by a deterioration in the expectations index. With German businesses taking a less positive view of the economic outlook EUR exchange rates struggled to find any particular traction.
In the absence of any fresh Eurozone data today the single currency may remain on the back foot as global trade anxieties continue to mount.
US Dollar Slides Ahead of Consumer Confidence Index
A modest improvement in the latest Chicago Fed national activity index failed to offer USD exchange rates encouragement last night. As the index remained within negative territory the positive impact on the US Dollar was limited, especially as relations between the US and Iran remain tense. Even though markets hope to see a breakthrough on trade at the upcoming G20 meeting USD exchange rates remained under pressure overnight.
Tonight’s US consumer confidence index reading may prompt further US Dollar selling, with forecasts pointing towards a decline in sentiment on the month.
Canadian Dollar Falters as Oil Rally Stalls
Oil prices remained in the region of their recent highs on Monday as the US and Iran remained at loggerheads. However, the Canadian Dollar struggled to make fresh gains against its rivals as jitters over tighter levels of supply weighed on the minds of investors. With the OPEC-led alliance looking set to maintain its production cuts for longer this saw CAD exchange rates falter during the day’s European session.
With April’s wholesale trade sales figure expected to show a sharp slowdown on the month the Canadian Dollar appears on course for further losses.
Rising Credit Card Spending Boosts New Zealand Dollar
Another acceleration in credit card spending helped to shore up the New Zealand Dollar at the start of the week. As spending rose 6.6% on the year in May this inspired greater confidence in the underlying health of the domestic economy, suggesting that consumers are in a more optimistic mood. Coupled with the softness of the US Dollar this kept NZD exchange rates on a positive footing.
A widening of May’s trade balance could offer the New Zealand Dollar a more substantial rallying point this morning.
Data Releases
June 25th 08:45 NZD Trade Balance (MAY) 971 million
June 25th 20:00 GBP CBI Reported Sales (JUN) -3
June 25th 22:30 CAD Wholesale Trade Sales (MoM) (APR) 0.3%
June 26th 00:00 USD Consumer Confidence Index (JUN) 131.0