Signs of Renewed UK Business Optimism Boost Pound

Australian Dollar Struggles for Support amid Trade Speculation

While the White House offered fresh optimistic signals on trade, suggesting that a deal with China is close, this failed to give the Australian Dollar any significant boost. The mood towards the antipodean currency remained relatively muted at the start of the week, struggling to find any particular cause for confidence. As doubt over the health of the global growth outlook lingers AUD exchange rates look set to remain on the back foot.

Fresh commentary from Reserve Bank of Australia (RBA) Governor Philip Lowe could put a further dampener on the Australian Dollar this morning if he adopts a dovish tone on monetary policy.

Pound Benefits from Reported Retail Sales Recovery

November’s CBI reported retail sales index bettered forecasts as it picked up from -10 to -3, suggesting a greater level of confidence among businesses and consumers. This stronger showing helped to limit market anxiety over the health of the UK economy, particularly as the survey suggested greater optimism for a strong month of retail sales in December. As a result, GBP exchange rates found renewed traction during last night’s European session.

Any softening in the latest UK mortgage approvals figure, however, may see the Pound fall out of favour once again.

Improved IFO Business Sentiment Fails to Stoke Euro Rally

In line with forecasts, the latest set of German IFO business sentiment indexes saw an improvement on the month. While the modest upticks in the current conditions and expectations indexes point towards greater resilience for the Eurozone’s powerhouse economy in the fourth quarter this offered little support to the Euro. Even though the deterioration in German growth appears to be bottoming out investors remain disappointed by the lack of material rebound.

A steady GfK consumer confidence index is likely to limit the potential for Euro gains this evening.

US Dollar Gains Muted after Disappointing Chicago Fed Index

As the Chicago Fed national activity index fell deeper into negative territory this limited the strength of USD exchange rates overnight. However, as the Dallas Fed manufacturing index defied forecasts of a fresh decline to pick up from -5.1 to -1.3 in November the mood towards the US Dollar improved. While the world’s largest economy continues to send mixed signs over its economic outlook USD exchange rates remained on a relatively steady footing.

If the advance goods trade deficit widens as anticipated tonight, though, the US Dollar could fall more sharply out of favour.

Wholesale Trade Sales Rebound Shores up Canadian Dollar

An unexpectedly strong rebound in September’s wholesale trade sales figure encouraged the Canadian Dollar to make some gains last night. As sales strengthened 1% on the month this almost entirely reversed August’s contraction, bolstering confidence in the underlying health of the Canadian economy. Even so, with market risk appetite proving generally limited CAD exchange rates struggled to gain significant traction.

In the absence of any fresh domestic data the Canadian Dollar may struggle to hold onto its positive footing for long today.

US-China Trade Speculation Boosts New Zealand Dollar

Speculation that the US and China could agree a phase one trade deal before a fresh round of US tariffs come into force in December helped to limit the downside potential of NZD exchange rates. While it remains to be seen whether the latest positive signals from officials will amount to anything this was still enough to give the New Zealand Dollar a temporary boost.

A solid quarter of retail sales growth could see NZD exchange rates gaining further ground this morning.

Data Releases

November 26th 07:45 NZD Retail Sales ex Inflation (QoQ) (3Q) 0.5%
November 26th 17:00 EUR German GfK Consumer Confidence Index (DEC) 9.6
November 26th 19:05 AUD Reserve Bank of Australia Governor Philip Lowe Speaks
November 26th 19:30 GBP BBA Loans for House Purchase (OCT) 42,150
November 26th 23:30 USD Advance Goods Trade Balance (OCT) -71 billion

Louisa Heath