Australian Dollar Falters Without Data
Demand for the Australian Dollar generally weakened at the start of the week as the earlier sense of market risk appetite faded. Investors lacked any particular incentive to favour the antipodean currency in the absence of fresh domestic data. With global trade tensions appearing set to persist for the foreseeable future the risk-sensitive Australian Dollar struggled to find any support against its rivals.
An uptick in the NAB business confidence index could encourage AUD exchange rates to trend higher once again, though.
Pound Recovers from Multi-Year Lows
After reaching multi-year lows over the weekend the Pound was able to recover some of its losses overnight. Speculation over the likelihood of the UK crashing out of the EU without a deal persisted, even with the potential for political action limited by Parliament’s summer recess. While markets maintain some hope that MPs could still avert a no-deal scenario this may not be enough to prevent GBP exchange rates turning bearish again in the near future.
However, the Pound could gain some fresh ground this evening if June’s average weekly earnings figure accelerates as forecast.
Italian Political Twists Weigh on Euro
The mood towards the Euro soured during Monday’s European session as Italian political concerns continued to mount. With the future of the current coalition government looking limited, given the deputy prime minister’s push for fresh elections, confidence naturally diminished. If Italy appears at risk of swinging further to the right amid fresh political chaos this could see the single currency tumble in the days ahead.
With forecasts pointing towards a fresh decline from August’s German ZEW economic sentiment index the potential for a EUR exchange rate rally appears muted.
US Dollar Fails to Capitalise on Market Risk Aversion
Although market risk appetite eased yesterday this was not enough to shore up the US Dollar. Worries over the underlying health of the world’s largest economy remained even in the absence of any fresh US data releases. This limited market support for USD exchange rates, with investors opting to favour other safe-haven assets such as the Japanese Yen instead.
While the consumer price index is not the Federal Reserve’s preferred measure of inflation an uptick here could still offer the US Dollar a boost.
Canadian Dollar Muted as Oil Prices See Limited Gains
Oil prices remained in positive territory on Monday, although market movement proved rather narrow thanks to an increases sense of investor malaise. The outlook of the oil market remains underwhelming, given the wider decline in global growth and the weakening demand for oil. This left the commodity-correlated Canadian Dollar with little in the way of support, prompting fresh losses against many of the majors.
As long as market risk aversion persists the upside potential of CAD exchange rates may prove lacking.
Retail Spending Decline Drags Down New Zealand Dollar Demand
Confidence in the outlook of the New Zealand economy weakened on the back of July’s retail card spending figures. As spending defied expectations of a solid increase to instead contract -0.1% on the month this left NZD exchange rates biased to the downside. Lower levels of consumer spending could translate into weaker economic growth, giving the Reserve Bank of New Zealand (RBNZ) greater cause for dovishness.
Without a rebound in July’s food price index the New Zealand Dollar looks set to remain on the back foot this morning.
Data Releases
August 13th 08:45 NZD Food Price Index (MoM) (JUL)
August 13th 11:30 AUD NAB Business Confidence (JUL) 3
August 13th 18:30 GBP Average Weekly Earnings (3M/YoY) (JUN) 3.7%
August 13th 19:00 EUR German ZEW Economic Sentiment Index (AUG) -28
August 13th 22:30 USD Consumer Price Index (YoY) (JUL) 1.7%