Australian Dollar (AUD) Slides as Aussie Services Activity Contracts
The Australian Dollar (AUD) suffered losses at the end of the week but was able to make gains against both the Euro and Pound.
The latest Australian PMI data revealed activity in the country’s services sector declined in August, with CommBank’s PMI slumping from 58.2 to a dire 48.1, where 50 is the no change mark. Added to this, while Australia’s manufacturing sector continued to expand, the rebound began to slow with the PMI edging down from 54 to 53.9.
Looking ahead, the ‘Aussie’ could edge lower at the start of the week if risk appetite continues to slump as attention turns back to US Congress. The Republicans and Democrats are struggling to agree on stimulus to boost the world’s largest economy.
Pound (GBP) Dragged Away from Earlier Highs on Brexit Pessimism
The Pound (GBP) struggled during Friday’s session, losing most of its early gains due to increased Brexit worries, while better-than-expected economic data added some volatility to GBP.
Earlier in the session, retail sales data boosted Sterling to a one-and-a-half month high against the Euro and sent the Pound towards an eight-month high against the Dollar. However, the mood soon soured after public borrowing jumped to a record £2 trillion and the EU’s chief Brexit negotiator said the latest round of trade talks did not move forward.
Looking ahead, Sterling could extend its losses at the start of this week if worries about the country’s departure from the EU continues to drag the Pound lower.
Euro (EUR) Slides as Data Suggests Bloc’s Recovery Will Not be V-Shaped
The Euro (EUR) slumped on Friday after a round of business surveys showed a stuttering economic recovery in the bloc.
The latest flash PMIs from the Eurozone revealed both the services and manufacturing numbers were worse than expected and suggested the fast start to the bloc’s recovery was slowing in the summer months. The upbeat effects of reopening economies in the Eurozone faded and confirmed the rebound would not likely be V-shaped, as was previously hoped.
The single currency could slide further today on cautious markets focusing on the latest downbeat data from across the bloc and upcoming German GDP data later in the week.
US Dollar (USD) Escapes Ninth Consecutive Week of Declines
The US Dollar (USD) was on track to end the week on what would be the ninth week in a row of declines. However, the rebound in the ‘Greenback’ allowed the Dollar to escape its longest losing streak since the summer of 2010.
Meanwhile, the latest PMI surveys from the United States improved more than expected, showing a strong expansion in the US private sector this month. The PMI composite hit an 18-month high with the data indicating a strong recovery in private sector business conditions, which offered USD some support at the end of last week.
Looking ahead, the US Dollar could receive further support if the latest Chicago Fed National Activity Index jumps higher than expected in July.
Canadian Dollar (CAD) Mixed as Retail Sales Jump Back Above Pre-Coronavirus Levels
The Canadian Dollar (CAD) rallied against a handful of currencies but struggled against the US Dollar and New Zealand Dollar as oil prices slumped.
However, CAD was offered some support after the latest Canadian retail sales data revealed sales jumped by 23.7%, back above pre-coronavirus levels.
The oil-sensitive ‘Loonie’ could continue to slide this week if oil prices extend last week’s slide as investors continue to worry about a slow recovery from the coronavirus pandemic.
New Zealand Dollar (NZD) Rises as ‘Good Progress’ Made in Auckland
The New Zealand Dollar (NZD) rallied against a handful of currencies but struggled against the US Dollar as the currency rebounded.
Meanwhile, the ‘Kiwi’ edged higher after Prime Minister Jacinda Arden deferred a decision on whether to ease the lockdown in Auckland as 11 new coronavirus cases were reported. She noted there would be a review on Monday but ‘good progress’ had been made.
Looking ahead, if the Prime Minister decides to extend the lockdown in Auckland it could weigh on sentiment and send NZD lower at the start of this week. Added to this, weak retail sales could send the currency lower.
Upcoming Data
08:45 NZD Retail Sales (Q2) -9%
22:30 USD Chicago Fed National Activity Index (Jul) 2