Promise of Chinese Economic Stimulus Shores up Australian Dollar
News that fresh Chinese economic stimulus is in the pipeline encouraged investors to pile back into risk-sensitive assets ahead of the weekend, including the Australian Dollar. Markets hope that this new round of stimulus could help the world’s second largest economy recover some of its lost growth momentum, boosting the global growth outlook. As the Australian Dollar often acts as a proxy for the Chinese economy this naturally fuelled an AUD exchange rate uptrend.
If July’s home loans data points towards an uptick in domestic confidence this could give the Australian Dollar an additional leg up.
Pound Fails to Hold Footing amid Political Drama
After a strong run of gains the Pound lost some of its steam during Friday’s trading session as political anxiety picked up once again. Although opposition party leaders agreed to block Boris Johnson’s push for a general election this failed to offer GBP exchange rates any fresh boost. Even with the risk of an election off the table for the time being investors remain wary of the turbulent current nature of UK politics.
GBP exchange rates could rally this afternoon, though if July’s gross domestic product data shows an improvement in growth.
Euro Extends Losses as German Production Slumps
German industrial production remained in decline at the start of the third quarter, contracting -4.2% on the year. This raised fresh concerns over the health of the Eurozone’s powerhouse economy as the odds of a potential recession increased. Even though global trade tensions have shown signs of easing in recent days the outlook for the German manufacturing sector remains muted, leaving investors with little reason to favour the Euro.
A narrowed German trade surplus may push the single currency lower across the board today.
Underwhelming Jobs Report Weighs on US Dollar
As August’s headline change in non-farm payrolls figure fell short for forecast, clocking in at 130,000 rather than 160,000, the mood towards the US Dollar soured. Even so, the underlying detail of the jobs report were not entirely negative as average hourly earnings saw unexpected growth. With the labour market still showing signs of tightening, though, the Federal Reserve remains under pressure to cut interest rates more aggressively.
With market risk appetite increasing USD exchange rates may struggle to find a rallying point in the near term.
Rising Canadian Employment Encourages Canadian Dollar Gains
A sharp increase in employment in August helped to drive the Canadian Dollar higher against many of the majors heading into the weekend. This improvement was thanks to an unexpected increase in the participation rate, which rose from 65.6 to 65.8. Even though the unemployment rate failed to show any corresponding tightening markets still took encouragement from this evidence of a tightening labour market.
As long as risk sentiment continues to dominate markets CAD exchange rates are likely to remain on a positive footing.
Global Trade Hopes Lift New Zealand Dollar
The general improvement in market sentiment gave the New Zealand Dollar a boost on Friday. With Chinese economic stimulus likely to bolster global growth NZD exchange rates gained fresh ground, in spite of lingering domestic worries. The relative weakness of the US Dollar also offered the higher-yielding New Zealand Dollar encouragement.
Evidence of a slowdown in the second quarter manufacturing sales figure may put NZD exchange rates on the back foot
Data Releases
September 9th 08:45 NZD Manufacturing Sales (YoY) (2Q) 1.3%
September 9th 11:30 AUD Home Loans (MoM) (JUL) 0.5%
September 9th 16:00 EUR German Trade Balance (JUL) 12.9 billion
September 9th 18:30 GBP Gross Domestic Product (MoM) (JUL) 0.1%