Risk Appetite Lifts Australian Dollar
Underwhelming US production data helped to shore up the Australian Dollar ahead of the weekend, with signs continuing to point towards a weaker performance from the world’s largest economy. This pushed investors to favour the higher-yielding Australian Dollar over its US rival, even as doubts over the likelihood of an imminent US-China trade breakthrough remain.
Any fresh deterioration in market risk appetite could easily see AUD exchange rates come under renewed pressure this week, however.
Political Jitters Limit Pound Appeal
Support for the Pound remained largely limited on Friday thanks to the lingering uncertainty surrounding the upcoming general election. Political anxiety kept GBP exchange rates under pressure as politicians continued to gear up for the December vote. As clarity over the future shape of the UK’s relationship with the EU remains elusive this left the Pound on a weaker footing.
In the absence of any fresh domestic data GBP exchange rates may struggle to recover their lost ground in the near term.
Euro Benefits from Widened Eurozone Trade Surplus
A wider-than-expected Eurozone trade surplus offered a boost to the Euro as the currency union showed signs of shrugging off ongoing global trade anxieties. Even so, the positive impact of the trade data was ultimately limited thanks to the confirmed weakening of the latest Eurozone inflation figures. As the monthly consumer price index eased to just 0.1% the odds of future European Central Bank (ECB) monetary loosening picked up.
Fresh dovish commentary from ECB policymakers could see the single currency fall out of favour in the near future.
Slowing US Production Drags on US Dollar Rates
October’s industrial and manufacturing production figures fell short of forecast, knocking the US Dollar into a sharp slump during Friday’s European session. Investors were also spooked by a marked decline in the capacity utilisation index, pointing towards a further deterioration in production at the start of the fourth quarter. With the New York empire manufacturing index also seeing a surprise deterioration this added to the bearish mood of USD exchange rates.
Any slowdown from the NAHB housing market index may keep the US Dollar on the back foot as worries over the US economic outlook mount.
Less Dovish BOC Comments Offer Canadian Dollar Boost
Demand for the Canadian Dollar picked up in the wake of Bank of Canada (BOC) Governor Stephen Poloz’s latest public appearance. As Polez failed to indicate any particular dovishness this boosted hopes that the central bank will leave monetary policy on hold for longer. Optimistic comments on the subject of wage growth offered CAD exchange rates an additional boost, meanwhile.
A softening oil market and increased market risk aversion may still put a dampener on the Canadian Dollar.
Manufacturing PMI Rebound Shores up New Zealand Dollar
Confidence in the underlying health of the New Zealand economy improved in response to October’s manufacturing PMI. While forecasts had pointed towards another month of contraction for the sector the index instead surged from 48.8 to 52.6. With the manufacturing sector in a renewed state of growth the risk of a fourth quarter economic slowdown diminished, giving NZD exchange rates a leg up.
If the service sector demonstrates a similar level of growth this may encourage the New Zealand Dollar to extend its bullish run further today.
Data Releases
November 18th 07:30 NZD Services PMI (OCT) 54.2
November 19th 01:00 USD NAHB Housing Market Index (NOV) 71