Australian Dollar Slumps amid Trade Uncertainty
The Australian Dollar (AUD) fell back on Tuesday, relinquishing its gains from earlier in the week as a result of renewed uncertainty in US-China trade. This came as Beijing denied knowledge of a phone call touted by Donald Trump as signs that China sought the re-opening of trade talks, casting fresh doubts on the possibility of some sort of reconciliation between the two sides.
Looking ahead, we may see the Australian Dollar remain on the back foot today as today’s data is expected to show domestic construction work contracted again in the second quarter.
Opposition Efforts to Block No-Deal Brexit Boosts Pound
The Pound (GBP) accelerated against the majority of its peers on Tuesday following a meeting by UK opposition parties to prevent a no-deal Brexit. The talks, led by Labour leader Jeremy Corbyn, detail MP’s plans to block a no-deal Brexit through legislative efforts when Parliament returns from recess in September.
Also on the table was the option for a vote of no-confidence in Boris Johnson in October, should the legislative route prove unsuccessful.
Expect Brexit to continue to act as the main catalyst of movement in GBP through the mid-week as UK economic data remains thin on the ground.
Euro Retreats on Dovish ECB Chatter
The Euro (EUR) was put on the back foot overnight on Tuesday in response to some dovish chatter from the European Central Bank (ECB). ECB Vice President Luis de Guindos, suggested that interest rates are going to remain low for a long time, whilst also stating the ‘ECB has to act with determination’ in regards to the use of negative rates.
Coming up, the deadline for coalition talks in Italy could stoke some volatility in the Euro today as the country faces the possibility of snap elections if talks between the Democratic Party and Five-Star movement fail to lead to the creation of a new government.
US Dollar Subdued as US Consumer Confidence Deteriorates
The US Dollar (USD) struggled to find support overnight on Tuesday, as data revealed a modest fall in domestic consumer confidence in August. Also weighing on USD exchange rates were concerns over US-China trade, with recent developments casing further doubt that the two countries will be able to resolve their trade dispute in the near term.
Looking ahead, a speech by the Federal Reserve’s Thomas Barkin could provide some fresh impetus for the US Dollar later tonight, as markets look for any confirmation the bank may cut rates next month.
Canadian Dollar Stabilises as Oil Nears $60 a Barrel
The Canadian Dollar (CAD) remained steady on Tuesday, with the oil-sensitive ‘Loonie’ finding so limited support as crude prices neared $60 a barrel.
New Zealand Dollar Slides as Risk-Off Mood Prevails
The New Zealand Dollar (NZD) was also a victim of heightened trade tensions yesterday, with the ‘Kiwi’ falling in step with the ‘Aussie’ as investors shunned risk-sensitive assets.
Data Releases
August 28th 11:30 AUD Construction Work Done (Q2) -1%
August 28th 16:00 EUR German Consumer Confidence 9.6
August 29th 02:20 USD Fed Barkin Speech