Weak Business Confidence Limits Australian Dollar Appeal
November’s NAB business confidence index slipped from 2 to 0 as forecast, keeping AUD exchange rates on the back foot yesterday. With markets seeing less cause for confidence in the outlook of the Australian economy the Australian Dollar struggled to find support against its rivals. Although reports emerged overnight that the US could delay its planned December tariffs on Chinese products this failed to encourage any rebound for the antipodean currency.
A weaker reading from the Westpac consumer confidence index may add to the bearish mood of AUD exchange rates this morning.
Pound Shrugs off Stagnant UK Growth Rate
A surprise stagnation in the monthly UK gross domestic product failed to knock the Pound off its positive footing last night. While the monthly growth rate fell short of forecast, raising the risk of a disappointing fourth quarter GDP figure, GBP exchange rates remained on an uptrend. With markets still confident that a Conservative majority could be on the cards at the general election the potential for Pound losses remained muted.
Even so, as polling day draws closer the potential for a political upset looks set to prevent GBP exchange rates making a further move higher.
Improved ZEW Economic Sentiment Fuels Euro Uptrend
EUR exchange rates pushed higher across the board during Tuesday’s European session as the latest ZEW economic sentiment survey delivered unexpectedly positive results. After the negative reading seen in November the German sentiment index clocked in at a solid 10.7, suggesting a greater level of optimism within the Eurozone’s powerhouse economy. While the current conditions index remained in negative territory this was not enough to limit the appeal of the Euro at this juncture.
As anticipation mounts for tomorrow’s European Central Bank (ECB) interest rate announcement, though, the single currency may struggle to hold onto its gains.
Small Business Optimism Fails to Boost US Dollar
Although November’s NFIB small business optimism index picked up from 102.4 to 104.7 on the month the US Dollar struggled to gain any significant ground last night. Even with businesses showing increased signs of confidence as the end of the year approaches markets still see reason to worry over the outlook of the world’s largest economy. A sharper-than-expected dip in non-farm productivity stoked fresh anxiety over the loss of economic momentum in the third quarter.
Ahead of the Federal Open Market Committee’s (FOMC) final rate decision of the year support for USD exchange rates could prove limited.
Canadian Dollar Weighed Down by Lingering Anxiety
While oil prices saw some improvement overnight this was not enough to give the Canadian Dollar any particular boost against its rivals. Lingering worries over the health of the global trade outlook and recent signs of Canadian economic weakness left investors with little incentive to support CAD exchange rates at this stage.
With the third quarter capacity utilisation index expected to show a deterioration the Canadian Dollar could fall further out of favour tonight, with weaker production signals raising the risk of a soft fourth quarter.
Signs of Weakening Economic Activity Dent New Zealand Dollar
December’s ANZ truckometer saw a sharp -1.5% contraction on the month, pointing towards a weaker level of economic activity in the final month of the year. This suggests that New Zealand could be on track for a weaker fourth quarter growth rate, leaving NZD exchange rates biased to the downside.
As forecasts suggest a moderate rebound in retail card spending in November, however, the New Zealand Dollar may find a rallying point today.
Data Releases
December 11th 07:45 NZD Retail Card Spending (MoM) (NOV) 0.5%
December 11th 09:30 AUD Westpac Consumer Confidence (DEC) -0.7%
December 11th 23:30 CAD Capacity Utilisation Rate (3Q) 82.1%
December 12th 05:00 USD Federal Open Market Committee Rate Decision 1.75%