Australian Dollar (AUD) Muted Ahead of RBA Minutes
The Australian Dollar (AUD) struggled to find much support against its rivals on Friday in the absence of any encouraging domestic data.
Although the initial impact of Thursday’s disappointing labour market report started to fade, this failed to pave the way towards an AUD exchange rate recovery. Lingering anxiety over Covid-19 and the outlook of the global economy kept the ‘Aussie’ on a generally weaker footing, especially as the latest US data bettered expectations.
Confirmation of the Reserve Bank of Australia’s (RBA) dovish bias in its latest set of meeting minutes may see the Australian Dollar shed further ground today.
Pound (GBP) Sees Volatility Thanks to UK Government’s Stance on UK-EU Brexit Talks
The Pound (GBP) experienced some volatile trading ahead of the weekend as the UK government issued some mixed messages on Brexit.
While Boris Johnson did not close the door to UK-EU trade talks continuing into another week, he warned the UK to prepare for an Australian-style no-deal Brexit and a government spokesperson indicated that further talks would be a waste if the EU does not change its position.
As markets continue to weigh up the UK’s economic outlook and a no-deal scenario, the mood towards the Pound may remain muted ahead of further talks.
Euro (EUR) Mixed on Upbeat Trade and Narrowed Eurozone Trade Surplus
The Euro (EUR) made some gains on improved risk appetite but proved sluggish in the wake of a larger-than-expected narrowing of the Eurozone trade surplus.
As the surplus narrowed from 27.7 billion to 14.7 billion in August, this underlined the risk of the currency union experiencing a fresh slowdown in economic momentum. With trade conditions looking unlikely to pick up in the near future, investors saw little reason to buy into the single currency at the end of the week.
Another contraction in Eurozone construction output could drive further selling pressure for EUR exchange rates, as could the deteriorating coronavirus situation in many European countries.
US Dollar (USD) Limited despite US Retail Sales Strength
The US Dollar (USD) slipped slightly following an improvement in market risk appetite on Friday, but losses were capped by US retail sales experiencing a solid increase on the month in September.
A 1.9% monthly increase in retail sales offered investors fresh cause for optimism in the outlook of the world’s largest economy, with stronger consumer spending likely to shore up growth.
Persistent market risk aversion may well keep USD exchange rates on a stronger footing over the course of the day as the coronavirus resurgence weighs on market sentiment.
Canadian Dollar (CAD) Avoids Negative Impact of Manufacturing Sales Decline
The Canadian Dollar (CAD) held onto an uptrend in spite of August’s Canadian manufacturing sales data disappointing.
Although sales saw a dramatic 2% slump on the month, following July’s sharp increase, worries over the health of the Canadian economy proved limited. A temporary diminishing in market jitters helped to shore up CAD exchange rates, with markets increasing betting on the possibility of a Covid-19 vaccine breakthrough.
A solid month of wholesale sales could encourage the Canadian Dollar to gain further traction against its rivals.
New Zealand Dollar (NZD) Buoyed by Solid Business NZ PMI
The New Zealand Dollar (NZD) found some support as the latest Business NZ PMI jumped from 51 to 54 on the month.
This suggestion of renewed momentum within the manufacturing sector encouraged NZD exchange rates, even in the face of lingering global market anxiety. A fresh bout of hope for a potential Covid-19 vaccine also offered a lift to the ‘Kiwi’, in spite of a lingering sense of risk aversion.
If the corresponding services PMI fails to show a similar uptick, though, the mood towards the New Zealand Dollar could easily sour this morning.
Data Releases
08:30 NZD Services PMI (Sep) 48.5
11:30 AUD Reserve Bank of Australia Meeting Minutes
20:00 EUR Eurozone Construction Output (Aug) -4.4%
23:30 CAD Wholesale Sales (Aug) 0.1%