Solid Chinese Trade Data Benefits Australian Dollar
A better-than-expected set of Chinese trade data helped to shore up the Australian Dollar yesterday, even as import volumes remained in negative territory. While Chinese imports fell investors were encouraged to find that the trade surplus had not narrowed as far as forecast in July. As the Australian Dollar often acts as a proxy for the Chinese economy AUD exchange rates benefitted from this signal of resilience.
However, if the Reserve Bank of Australia (RBA) shows signs of dovishness in its latest statement on monetary policy this could drive the Australian Dollar down this morning.
Pound Stumbles on House Price Decline
As the RICS house price index remained in a slump this left the Pound with little in the way of support overnight. This latest evidence of a slowing housing market exacerbated concerns over the health of the wider economic outlook, to the detriment of GBP exchange rates. Mounting anxiety over Brexit and Parliament’s efforts to avoid a no-deal scenario also kept demand for the Pound in check.
If the second quarter gross domestic product eases as forecast the mood towards the Pound looks set to sour further tonight.
Cautious ECB Outlook Keeps Euro Under Pressure
July’s European Central Bank (ECB) Economic Bulletin failed to offer the Euro any particular support, with policymakers maintaining a cautious economic outlook. As the Bulletin expressed fresh concern over the ongoing impact of global trade tensions and rising wave of protectionism EUR exchange rates fell out of favour. The dovish tone of the commentary fuelled bets that an imminent interest rate cut remains on the cards, weighing down the single currency during the European session.
A narrowing of the German trade surplus could see EUR exchange rates extend their slump ahead of the weekend.
Improved Jobless Claims Fail to Shore up US Dollar
Demand for the US Dollar proved mixed last night even as the latest set of jobless claims figures bettered forecast. While jobless claims saw a smaller increase than anticipated, though, USD exchange rates struggled to capitalise on this improvement. With market risk appetite generally picking up the appeal of the US Dollar diminished in turn, as investors lacked any real incentive to favour the safe-haven currency.
Even so, any fresh signs of escalation in the US-China trade dispute could still help to buoy USD exchange rates over the course of the day.
Weak Housing Data Limits Canadian Dollar Upside
Support for the Canadian Dollar weakened as June’s new housing price index saw a contraction on both the month and the year. With the Canadian housing market continuing to demonstrate signs of a slowdown CAD exchange rates came under pressure. However, as the general sense of market risk appetite remained elevated this helped to limit the data’s negative impact on the Canadian Dollar.
Any signs of tightening within the Canadian labour market may offer CAD exchange rates a leg up heading into the weekend.
New Zealand Dollar Recovers Ground as RBNZ Rate Surprise Fades
As the impact of the Reserve Bank of New Zealand’s (RBNZ) unexpectedly sharp interest rate cut began to fade the New Zealand Dollar recovered some of its lost ground. With markets now seeing less chance of policymakers following through with additional rate cuts NZD exchange rates were able to bounce back. A solid set of Chinese trade data also offered a boost to the risk-sensitive currency.
However, without the support of fresh domestic data today the New Zealand Dollar could return to a weaker footing against its rivals.
Data Releases
August 9th 11:30 AUD Reserve Bank of Australia Statement on Monetary Policy
August 9th 16:00 EUR German Trade Balance (JUN) 19.8 billion
August 9th 18:30 GBP Gross Domestic Product (YoY) (2Q) 1.4%
August 9th 22:30 CAD Unemployment Rate (JUL) 5.5%