Australian Dollar Weakens as Business Investment Declines

Australian Dollar (AUD) Limited by Private Capital Expenditure Data

The Australian Dollar (AUD) failed to find any support on the back of the third quarter private capital expenditure reading.

While forecasts had pointed towards a -1.5% decline on the quarter, the figure instead showed a -3% drop, signalling an even greater souring of business sentiment. As the second quarter figure was also revised lower, this fuelled renewed anxiety over the health of the Australian outlook.

If market risk appetite fades further heading into the weekend, this may push the Australian Dollar lower across the board.

Pound (GBP) Falls on Renewed Brexit Uncertainty

The Pound (GBP) fell during Thursday’s European session as fears persist that UK-EU Brexit trade negotiations could break down as talks appear to remain deadlocked.

The UK government’s announcement that the UK will return to a tier system in December failed to inspire support for Sterling as the vast majority of England will enter the top two tiers of restrictions next week.

Heading in the weekend GBP investors will continue to monitor the UK-EU Brexit talks for any signs of progress towards reaching an agreement.

Euro (EUR) Appeal Diminished by German Consumer Confidence Drop

The Euro (EUR) faltered as the German GfK consumer confidence index showed a sharper decline than anticipated for December.

As the index slumped from -3.2 to -6.7, this highlighted the increasing sense of anxiety within the Eurozone’s powerhouse economy, pointing towards a sustained economic slowdown. With the European Central Bank (ECB) meeting minutes adding to the odds of a December policy move, the appeal of the single currency proved limited.

A fresh deterioration in November’s Eurozone economic sentiment index may see the Euro shedding further ground as the risk of a double-dip recession grows.

US Dollar (USD) Gains Ground in Spite of Thanksgiving Holiday

The US Dollar (USD) found support yesterday in spite of US markets being closed for the Thanksgiving holiday.

Markets were generally encouraged by the nature of the latest set of Federal Open Market Committee (FOMC) meeting minutes, which indicated that the central bank remains willing to act to support the US economy. Coupled with faltering market risk appetite this helped to shore up USD exchange rates.

As long as market risk sentiment does not improve markedly today, the US Dollar could remain biased to the upside ahead of the weekend.

Canadian Dollar (CAD) Trends Lower on Earnings Growth Slowdown

The Canadian Dollar (CAD) remained under a degree of pressure as September’s average weekly earnings showed a surprise slowdown.

Rather than delivering another yearly uptick of 7.5%, earnings instead saw growth of just 6.9%, undermining demand for the Canadian Dollar. With wage growth showing signs of slowing, worries over the health of the wider labour market and economy both grew, to the detriment of CAD exchange rates.

Unless oil prices can maintain a bullish trend in the near term support for the Canadian Dollar is unlikely to materially improve.

New Zealand Dollar (NZD) Fails to Benefit from Narrowed Trade Deficit

The New Zealand Dollar (NZD) failed to push higher yesterday even as October’s balance of trade showed a surprise narrowing of the deficit.

Despite the deficit narrowing from NZ$-1039 million to NZ$-500 million at the start of the fourth quarter NZD exchange rates failed to find any particular boost. Although signs point towards improving trade conditions, with higher-than-expected export volumes, the New Zealand Dollar was unable to hold onto its positive footing.

Any deterioration in November’s ANZ Roy Morgan consumer confidence index could drive the ‘Kiwi’ lower against its rivals this morning.

Data Releases

08:00 NZD ANZ Roy Morgan Consumer Confidence (Nov)
18:00 GBP Nationwide Housing Prices (Nov) 0.3%
21:00 EUR Eurozone Economic Sentiment Index (Nov) 86.5

Louisa Heath