Australian Dollar Buoyed by Improved Consumer Confidence
September’s Westpac consumer confidence index surprised to the upside, strengthening from 79.5 to 93.8 on the month.
This solid upturn in sentiment suggests a greater degree of optimism among Australian consumers, potentially pointing towards higher levels of spending and economic activity to come. A similar improvement in July’s home loans data added to the positive mood of the Australian Dollar, pushing the antipodean currency higher across the board.
However, if this morning’s consumer inflation expectations reading fails to impress investors AUD exchange rates still look vulnerable to renewed selling pressure.
UK Government’s Plans to Breach International Law Dent Pound
Support for the Pound remained limited overnight as tensions over Brexit continued to escalate. After a UK government official confirmed plans to potentially backtrack on parts of the withdrawal agreement, breaking international law, GBP exchange rates slumped sharply.
However, reports that the EU will not suspend talks over the matter ultimately put a floor under the Pound towards the end of the European session.
As long as the penultimate round of Brexit talks go ahead, this should calm some of the Pound’s bearishness in the near term.
Euro Under Pressure Ahead of ECB Announcement
Growing speculation ahead of tonight’s European Central Bank (ECB) policy announcement helped to keep the Euro on the back foot.
Investors anticipate a potential attempt by policymakers to talk the single currency down, leaving EUR exchange rates exposed to downside risk. While no imminent policy action appears likely at this stage, the Euro struggled to gain any particular traction yesterday.
Unless the ECB surprises markets with a significantly dovish shift in outlook, the single currency could see limited losses in the wake of the meeting.
Easing Investor Anxiety Limits Potential for US Dollar Gains
With market anxiety stabilising the US Dollar failed to hold onto its bullish run last night, hampered by increased demand for higher-yielding assets.
Although confidence in the strength of the global economic recovery remains tentative, USD exchange rates were unable to push higher. In the absence of any major US data releases the US Dollar was left to cede some of its recent gains.
Another significant weekly increase in initial jobless claims could also put a dampener on USD exchange rates as worries over the health of the US labour market linger.
Canadian Dollar Soft as BoC Leaves Door Open to Further Action
The Bank of Canada (BOC) failed to deliver anything in the way of surprises at its September policy meeting, opting to leave interest rates on hold once again.
Even so, policymakers still left the door open to further monetary policy support. While the BoC noted that the Canadian economy has started to recover from the impact of Covid-19, this was not enough to boost the Canadian Dollar.
Further commentary from BOC Governor Tiff Macklem could provoke further volatility for CAD exchange rates tonight.
New Zealand Dollar Shakes Off Manufacturing Sales Plunge
Second quarter manufacturing sales plunged -12.1% on the year, demonstrating the extent of the impact Covid-19 has had on the New Zealand economy.
However, as the general sense of market risk appetite picked up, this helped to limit the data’s negative impact on the New Zealand Dollar for the time being.
Any decline in August’s retail card spending figures may drag the antipodean currency down, given existing signs of weakness within the domestic economy.
September 10th 08:45NZDRetail Card Spending (MoM) (AUG)
September 10th 11:00AUDConsumer Inflation Expectations (SEP)
September 10th 21:45 EUR European Central Bank Rate Decision 0.0%
September 10th 22:30 USD Initial Jobless Claims (05 SEP) 846,000