New Zealand Dollar Falters as Trade Figures Miss Forecast

Construction Work Surprise Limits Australian Dollar Downside

A smaller-than-expected decline in the third quarter construction work data helped to limit some of the Australian Dollar’s downside potential yesterday. As construction only saw a -0.4% contraction on the quarter this encouraged hopes that the economy could recover further momentum in the fourth quarter. Even so, a persistent lack of clear progress towards a phase one trade agreement between the US and China saw AUD exchange rates struggle to gain any particular headway.

While forecasts point towards another quarter of negative private capital expenditure any improvement upon the second quarter reading could still boost the Australian Dollar.

Pound Shakes off UK Political Anxiety

Political jitters failed to keep the Pound under pressure last night, even as the polls pointed towards a narrowing of the Conservative Party’s lead. While markets remain wary of the outcome of the December general election GBP exchange rates still staged solid gains across the board overnight. With UK data releases lacking investors saw little reason to sell out of the Pound for the time being.

However, as worries over the UK’s economic resilience remain GBP exchange rates could struggle to hold onto a positive footing for long over the course of the day.

Underwhelming German Import Prices Drag on Euro

The Euro remained on the back foot as October’s German import price index figures highlighted a continued decline in price pressures. As prices slumped -3.5% on the year this raised concerns that inflationary pressure within the Eurozone’s powerhouse economy is still proving lacklustre. This did not bode well ahead of today’s German consumer price index report, leaving EUR exchange rates to trend lower.

Even so, if the headline German inflation rate picks up from 1.1% to 1.2% as forecast this could offer the single currency a solid rallying point.

Durable Goods Orders Uptick Offers Limited US Dollar Support

USD exchange rates found support overnight as October’s durable goods orders saw an unexpected 0.6% uptick on the month. While this was not enough to entirely reverse the previous month’s decline investors still took encouragement from the positive reading, helping to keep the US Dollar from weakening. An upward revision to the third quarter gross domestic product also gave USD exchange rates cause for confidence, in spite of ongoing trade speculation.

Without any major US data scheduled for release, however, the US Dollar looks vulnerable to selling pressure in the near term.

Canadian Dollar Appeal Limited Thanks to Oil Market Softness

In the absence of fresh domestic data the Canadian Dollar struggled to find traction against its rivals. With the mood of the oil market proving distinctly muted as well CAD exchange rates were left on the back foot as investors continued to speculate over the likelihood of a US-China trade deal being agreed in the near future.

Any widening of the current account deficit could see the Canadian Dollar come under further pressure tonight.

Widened Trade Deficit Weighs Down New Zealand Dollar

October’s New Zealand trade data failed to impress investors, showing a wider deficit than forecast as both import and export volumes picked up on the month. NZD exchange rates also came under pressure thanks to the release of the Reserve Bank of New Zealand’s (RBNZ) latest financial stability report. As the central bank showed lingering concern over the health of the New Zealand outlook the appeal of the New Zealand Dollar remained muted.

Unless business confidence shows a strong improvement in November NZD exchange rates look set to shed further ground this morning.

Data Releases

November 28th 10:00 NZD ANZ Business Confidence (NOV)
November 28th 10:30 AUD Private Capital Expenditure (QoQ) (3Q) -0.1%
November 28th 23:00 EUR German Consumer Price Index (YoY) (NOV) 1.2%
November 28th 23:30 CAD Current Account Balance (3Q) -9 billion

Louisa Heath

louisa.heath@torfx.com


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