Disappointing Chinese Trade Data Weighs on Australian Dollar
In the wake of underwhelming Chinese trade data the Australian Dollar fell further out of favour with investors. Although import volumes saw a modest increase on the year this was not enough to outweigh a fresh export contraction, signalling that the world’s second largest economy is still losing momentum. With weaker Chinese trade demands likely to weigh on the Australian economy in the months ahead AUD exchange rates were left to trend lower once again.
Comments from Reserve Bank of Australia (RBA) Governor Philip Lowe could put additional pressure on the Australian Dollar this morning if he expresses caution over the economic outlook.
Solid Conservative Polling Lead Boosts Pound
The Pound remained on a generally strong footing last night thanks to markets betting on the prospect of a Conservative majority. With the polls still showing a solid Conservative lead over Labour the odds of a hung parliament continued to diminish, to the benefit of GBP exchange rates. However, as a large proportion of voters remain undecided the potential for an election upset remains, helping to limit the headroom for further Pound gains.
This evening’s monthly gross domestic product reading could shore up GBP exchange rates if it points towards an uptick in growth momentum.
Stronger German Trade Limits Euro Downside
Confidence in the health of the German economy improved on the back of October’s set of trade data thanks to a surprise widening of the trade surplus. Exports defied forecasts of a -0.7% contraction to instead deliver growth of 1.2% on the month, suggesting a more limited drag from global trade tensions. Even so, the Euro struggled to capitalise on this positive data as order books still point towards weakness in the German trade outlook.
A positive reading from December’s ZEW economic sentiment index may encourage the single currency to make stronger gains this evening, however.
Market Risk Aversion Unable to Stoke US Dollar Bullishness
While market risk appetite proved limited in the wake of the underwhelming Chinese trade data this failed to give the US Dollar any particular boost. As the odds of an imminent breakthrough in US-China trade relations remain muted USD exchange rates struggled to find much traction last night. A minor uptick in consumer inflation expectations was not enough to trigger much movement for the US Dollar, meanwhile.
A stronger month for the NFIB small business optimism index may offer USD exchange rates a leg up tonight, though.
Canadian Dollar Shakes off Building Permits Decline
Another monthly drop in building permits was not enough to leave the Canadian Dollar under pressure overnight, even as the construction sector continued to show signs of weakness. As the impact of Friday’s disappointing jobs data faded this encouraged CAD exchange rates to recover some of their losses over the course of the day.
However, as long as signs continue to point towards weakness within the domestic economy support for the Canadian Dollar could easily fade.
Mixed Manufacturing Activity Limits New Zealand Dollar Potential
A mixed set of manufacturing activity figures gave the New Zealand Dollar little cause for confidence at the start of the week. Although activity picked up modestly in the third quarter this was accompanied by another weakening in the activity volume. As a result, markets still see reason to doubt the health of New Zealand’s economic outlook.
Unless December’s ANZ truckometer can show a solid improvement in economic activity NZD exchange rates look set to remain on the back foot.
Data Releases
December 10th 07:00 NZD ANZ Heavy Truckometer (MoM) (DEC)
December 10th 08:05 AUD Reserve Bank of Australia Governor Lowe Speech
December 10th 19:30 GBP Gross Domestic Product (MoM) (OCT) 0.1%
December 10th 20:00 EUR German ZEW Economic Sentiment Index (DEC) 0.3
December 10th 21:00 USD NFIB Small Business Optimism (NOV) 102.8