Australian Dollar (AUD) Trends Higher Ahead of RBA Minutes
The Australian Dollar (AUD) benefitted from the generally optimistic mood of investors yesterday in spite of a lack of domestic data developments.
With risk appetite on the rise once again the antipodean currency was able to push higher against many of the majors, capitalising on an easing in market anxiety over the global growth outlook. While the release of the Reserve Bank of Australia’s (RBA) meeting minutes loomed this was not enough to put any particular dampener on the ‘Aussie’ at this stage.
Still, if the minutes prove distinctly dovish in nature this could still see AUD exchange rates losing some of their traction over the course of the day.
Pound (GBP) Rallies Thanks to Easing Brexit Anxiety
The Pound (GBP) rebounded sharply at the start of the week as fears of an imminent no-deal Brexit scenario eased.
As the UK and EU agreed to extend their trade discussions, rather than ending them on Sunday as previously indicated, the mood towards the Pound improved dramatically. With a no-deal outcome appearing less likely, at least for the time being, GBP exchange rates pushed higher across the board as investor confidence picked up.
This sense of Pound bullishness may well falter in response to October’s UK unemployment rate, with the labour market expected to show a fresh deterioration on the month.
Euro (EUR) Lifted by Strong Rebound in Eurozone Industrial Production
The Euro (EUR) held onto a generally positive footing against many of the majors as October’s Eurozone industrial production figures bettered forecast.
As production rebounded sharply on the month, rising from just 0.1% to 2.1% at the start of the fourth quarter, this encouraged a greater sense of confidence in the underlying health of the Eurozone economy. With the manufacturing sector showing signs of having held up under pressure at the start of the quarter the appeal of the single currency naturally improved.
In the absence of any major Eurozone data releases today, though, the Euro could find itself falling out of favour once again.
US Dollar (USD) Struggles to Find Gains in Absence of Safe-Haven Demand
The US Dollar (USD) struggled to gain any particular traction against its rivals last night, dented by the surge in market confidence over Brexit.
With global market anxiety limited thanks to the extension of UK-EU trade talks there appeared little demand for the safe-haven US Dollar. The relative health of the Euro also put pressure on USD exchange rates, thanks to the negative correlation that exists between the two major currencies.
Even so, USD exchange rates could find a rallying point if the latest Empire State manufacturing index shows an improvement on the month as anticipated.
Canadian Dollar (CAD) Dented by Softening Oil Prices
The Canadian Dollar (CAD) softened as the oil market faced another day of weakness on Monday.
News that China could boost its shale gas development put pressure on oil prices, with investors spooked by the prospect of the global oversupply glut increasing. If Chinese demand for oil falls in 2021 this would bode ill for the health of the overall oil market, leaving the commodity-correlated Canadian Dollar on the back foot.
With October’s Canadian manufacturing sales figure looking set to show a loss of momentum on the month CAD exchange rates could face further selling pressure today.
New Zealand Dollar (NZD) Support Weakens on Services PMI Contraction
The New Zealand Dollar (NZD) lost a degree of support at the start of the week thanks to an underwhelming services PMI.
As the PMI unexpectedly fell from 50.8 to 46.7 in November, indicating a growth contraction within the service sector, this put some pressure on NZD exchange rates. With the New Zealand economy failing to hold up its earlier resilience in the face of the ongoing global Covid-19 crisis the appeal of the risk-sensitive ‘Kiwi’ weakened.
However, with forecasts pointing towards an improvement in the fourth quarter Westpac consumer confidence index the New Zealand Dollar could return to a positive footing this morning.
Data Releases
07:00 NZD Westpac Consumer Confidence (Q4) 102.5
11:30 AUD Reserve Bank of Australia Meeting Minutes
18:00 GBP Unemployment Rate (Oct) 5.1%
00:30 CAD Manufacturing Sales (Oct) 0.6%
00:30 USD Empire State Manufacturing Index (Dec) 6.8