Australian Dollar Falls in Response to Yuan Slump
The Australian Dollar (AUD) got off to a poor start this week, falling in response to a sharp sell-off of the Chinese Yuan (CNY). The fall comes amid heightened tensions between the US and China, which stoked concerns of potential currency manipulation by Beijing.
Putting additional pressure on AUD exchange rates today will be the Reserve Bank of Australia’s (RBA) latest policy decision. Whilst no policy changes are expected this month a dovish tone is likely to leave the ‘Aussie’ on the defensive.
Pound Sterling (GBP) Steady as UK Services Sector Shows Improvement
Outside of an initial wobble, the Pound (GBP) was mostly steady on Monday as markets welcomed the UK’s latest PMI release. The data revealed the UK’s all-important service sector expanded as its fastest pace in nine months in July. However, persistent Brexit uncertainty continued to limit the upside potential in Sterling yesterday, with the UK government re-affirming its commitment to leaving the EU in October.
In the absence of any notable UK economic data today, we may see no-deal Brexit bets continue capping any gains in GBP exchange rates.
Euro Surges on USD Weakness
The Euro (EUR) got off to an impressive start this week, maintaining the upward trajectory seen at the end of last week. This was helped by some fresh demand for the Euro, triggered by a weakening of the US Dollar amidst a rise in safe-haven demand.
In focus for EUR investors later this afternoon will be the publication of Germany’s latest factory orders figures, with a potential rebound in order growth helping to shore up support for the Euro.
US Dollar Struggles as US Services PMI Disappoints
The US Dollar (USD) struggled to find support yesterday after the ISM non-manufacturing PMI came in below expectations in July. Adding to the pressure on USD exchange rates were concerns over the US-China trade war, with a sharp slump in the Chinese Yuan stoking concerns that Beijing may be gearing up for a ‘currency war’.
Coming up later today we have the publication of the latest JOLTs jobs report, which could provide some lift to the US Dollar if jobs openings remained robust in June as expected.
Canadian Dollar Muted as Oil Prices Tumble
The Canadian Dollar (CAD) traded in a narrow range on Monday as demand for the oil-sensitive ‘Loonie’ was undermined by a sharp drop in the commodity, with Brent crude prices falling back to $60 a barrel.
New Zealand Dollar to Slide as Unemployment Rises?
After a fairly uneventful start to the week, the New Zealand Dollar (NZD) looks poised to weaken today as the latest NZ jobs report is expected to show domestic unemployment rose in the second quarter.
This comes ahead of the Reserve Bank of New Zealand’s (RBNZ) latest policy meeting on Wednesday, where an expected rate cut will likely dampen demand for the ‘Kiwi’.
Data Releases
August 6th 08:45 NZD Unemployment Rate (Q2) 4.3%
August 6th 08:45 NZD Employment Change (Q2) 0.4%
August 6th 11:30 AUD Trade Balance (Jun) $6bn
August 6th 14:30 AUD RBA Rate Decision 1%
August 6th 16:00 EUR German Factory Orders (Jun) 0.5%