Retail Sales Uptick Not Enough to Boost Australian Dollar
While May’s Australian retail sales bounced back from the previous month’s contraction this was not enough to shore up the Australian Dollar yesterday. As sales only saw a modest 0.1% increase this suggests that sentiment among domestic consumers remains muted in the face of global trade tensions and growth anxiety. This limited the upside potential of AUD exchange rates, with investors still expecting to see further monetary loosening from the Reserve Bank of Australia (RBA) in the months ahead.
Any improvement in the latest construction PMI could offer a boost to the Australian Dollar, however.
Pound Muted as New Car Sales Continue Slide
June’s UK new car sales data failed to offer investors any cause for confidence, showing a continued decline on the year. With Brexit-based uncertainty still casting a significant shadow over the UK economy consumers remained reluctant to invest in high-ticket items, prompting a -4.9% contraction in car sales on the year. Worries over the potential for the UK to crash out of the EU without a deal continued to put a dampener on demand for the Pound, meanwhile.
If June’s Halifax house price index also shows a decline in prices on the month this could add to the bearish mood of GBP exchange rates.
Stagnant German Construction Sector Weighs Down Euro
The German economy continued to concern investors as June’s construction PMI slumped from 51.5 to just 50.0. With the construction sector in a state of stagnation the risks of a weaker second quarter German gross domestic product remain. May’s Eurozone retail sales data also put pressure on EUR exchange rates as consumer spending failed to pick up on the month, leaving investors with little incentive to favour the single currency.
A sharp contraction in German factory orders may see the Euro extending its losses further this afternoon.
Lack of Activity Limits US Dollar Demand
With US markets closed to mark Independence Day support for the US Dollar proved rather limited last night. Lacking the support of any fresh domestic data USD exchange rates remained on a weaker footing throughout Thursday’s European session, with confidence in the economic outlook still generally lacking. As the Federal Reserve is still widely expected to cut interest rates again before the end of the year the appeal of the US Dollar remained limited.
Tonight’s US non-farm payrolls report could offer USD exchange rates a boost, though, as forecasts point towards a solid uptick in the headline change in non-farm payrolls figure.
Oil Price Dip Fails to Drag on Canadian Dollar
Although oil prices faltered overnight this was not enough to drive the Canadian Dollar down against its rivals. Instead, the commodity-correlated currency benefitted from the relative weakness of the US Dollar. In the absence of any fresh US data markets were inclined to adopt a more risk-positive outlook, boosting CAD exchange rates in the short term.
However, as forecasts suggest an increase in the Canadian unemployment rate tonight this could see the Canadian Dollar fall out of favour once again.
New Zealand Dollar Lacks Traction
With no fresh New Zealand data released yesterday NZD exchange rates struggled to find any particular traction. Increasing bets on the prospect of an imminent Reserve Bank of New Zealand (RBNZ) interest rate hike continued to limit the appeal of the New Zealand Dollar, especially as global central bank sentiment leans increasingly towards dovishness.
Even so, any disappointing US labour market data could boost NZD exchange rates with a fresh bout of market risk appetite.
Data Releases
July 5th 08:30 AUD Construction PMI (JUN) 41.7
July 5th 16:00 EUR German Factory Orders (YoY) (MAY) -6.3%
July 5th 17:30 GBP Halifax House Price Index (MoM) (JUN) -0.4%
July 7th 22:30 CAD Unemployment Rate (JUN) 5.5%
July 7th 22:30 USD Change in Non-Farm Payrolls (JUN) 163,000