Fading Trade Hopes Drag on Australian Dollar Demand
Increasing scepticism over the chances of an imminent US-China trade agreement left the Australian Dollar on a weaker footing at the start of the week. While media reports suggested that the two sides engaged in ‘constructive’ talks over the weekend this was not enough to encourage any particular sense of market confidence. As a result, the risk-sensitive Australian Dollar came under renewed pressure.
If the nature of the Reserve Bank of Australia’s (RBA) November meeting minutes leans towards dovishness this could see AUD exchange rates shed further ground.
Hopes of Political Certainty Boost Pound
A sense of optimism among investors helped to shore up the Pound during Monday’s European session in spite of an absence of fresh domestic data. With markets increasingly betting on the prospect of the UK avoiding another hung parliament and the chance of greater political certainty the mood towards the Pound naturally improved.
Signs of recovery from the CBI industrial trends orders index may give GBP exchange rates a fresh leg up tonight.
Signs of ECB Optimism Shore up Euro
Positive comments from European Central Bank (ECB) policymaker Boštjan Vasle offered the Euro a boost yesterday. As Vasle noted that Eurozone growth has stabilised and that the ECB’s recent stimulus is working as intended EUR exchange rates found some support. This more optimistic assessment encouraged hopes that the central bank might not opt for further monetary loosening in the near future.
With forecasts pointing towards a strong monthly uptick in Eurozone construction output the mood towards the single currency could improve further this evening.
Housing Market Disappointment Limits US Dollar Upside
A surprise dip in November’s NAHB housing market index kept the US Dollar under pressure last night, even as market risk appetite faded. With the US housing market showing renewed signs of weakness USD exchange rates stumbled, fuelled by lingering anxiety over the underlying health of the world’s largest economy. Even so, the downside potential of the US Dollar was still limited by anxiety over the global trade outlook.
Any weakness in the latest US building permits figure may see USD exchange rates shed further ground.
Canadian Dollar Weakens amid Risk Aversion
Growing worries over the prospect of an end to US-China trade tensions limited the appeal of the Canadian Dollar overnight. Oil prices came under renewed pressure as concerns over the health of global demand picked up, leaving the commodity-correlated Canadian Dollar on a generally weaker footing.
Further losses look likely for CAD exchange rates tonight, meanwhile, with markets anticipating a contraction from September’s manufacturing sales data.
Strong Service Sector Performance Bolsters New Zealand Dollar
Confidence in the outlook of the New Zealand economy improved in the wake of October’s services PMI, which picked up from 54.5 to 55.4. With the service sector continuing to demonstrate solid growth in spite of global slowdown worries NZD exchange rates found fresh support. However, an increasing sense of market risk aversion soon saw the New Zealand Dollar stumble once again.
Unless this morning’s producer price index data proves positive NZD exchange rates look vulnerable to a fresh downtrend.
November 19th 07:45 NZD Producer Price Index Input (QoQ) (3Q) 0.5%
November 19th 10:30 AUD Reserve Bank of Australia Meeting Minutes (NOV)
November 19th 20:00 EUR Eurozone Construction Output (YoY) (SEP) 2.7%
November 19th 21:00 GBP CBI Industrial Trends Orders Index (NOV) -30
November 19th 23:30 CAD Manufacturing Sales (MoM) (SEP) -0.5%
November 19th 23:30 USD Building Permits (MoM) (OCT) -0.8%