Australian Dollar (AUD) Lifted by Market Sentiment
The Australian Dollar (AUD) pushed higher against a number of the majors, despite a lack of fresh domestic data.
As a number of its rivals came under pressure, the antipodean currency found itself trending higher on Tuesday, even though confidence in the Australian Dollar’s outlook remains muted. With demand for safe-haven assets apparently limited, AUD exchange rates found room to strengthen.
The mood towards the Australian Dollar may improve further this morning, with forecasts pointing towards a modest uptick in private sector credit growth in August.
Pound (GBP) Sheds Ground despite UK Mortgage Approvals Jump
The Pound (GBP) lost its positive momentum during the European session as the impact of Monday’s Brexit-based optimism faded.
Investors struggled to find further motivation to boost GBP exchange rates overnight as the UK and EU are yet to agree a deal. Although August’s UK mortgage approvals figure hit its highest level since 2007, this failed to lift the Pound, given that the increase was primarily a result of the housing market thawing in the wake of lockdown.
The Pound’s weakness may continue unless the finalised second quarter UK gross domestic product shows a positive revision on the -20.4% quarter-on-quarter.
Euro (EUR) Sees Limited Losses on Negative German Inflation Rate
The Euro (EUR) benefitted from the relative weakness of the US Dollar, limiting the impact of another negative German consumer price index.
Inflationary pressure within the Eurozone’s powerhouse economy continued to fade in September, with the headline inflation rate sinking to -0.2%. While inflation looks set to trail significantly below the European Central Bank’s (ECB) 2% target for the foreseeable future, though, this failed to drag EUR exchange rates lower.
If the latest German unemployment rate shows any signs of picking up, pointing towards a weaker labour market, this could weigh on the single currency.
US Dollar (USD) Under Pressure ahead of Presidential Election Debate
The US Dollar (USD) came under increasing pressure last night as the impending presidential election debate stirred market jitters.
With the November presidential election already looking set to provoke elevated political tensions, markets took a wary view ahead of the debate. Support for the US Dollar also diminished as a result of August’s advance goods trade deficit widening further than forecast, swelling to $-82.9 billion as trade conditions soured.
As well as the outcome of the presidential debate, the US Dollar could lose further ground tonight on the back of the finalised second quarter US gross domestic product report.
Canadian Dollar (CAD) Slips as Producer Prices Disappoint
The Canadian Dollar (CAD) remained on the back foot as August’s producer price index showed a fresh contraction on the year.
The risk of lower Canadian inflation appeared to grow as price pressures weakened, to the detriment of CAD exchange rates. Weaker levels of domestic inflation would give the Bank of Canada (BOC) greater cause for caution, limiting the potential for a Canadian Dollar rally amid bets of further monetary policy measures to come.
However, the mood of CAD exchange rates could pick up this evening if July’s month growth rate shows a solid expansion, pointing towards a stronger third quarter gross domestic product.
New Zealand Dollar (NZD) Capitalises on Rivals’ Weakness
The New Zealand Dollar (NZD) made gains yesterday, benefitting from the relative softness of the US Dollar.
While domestic political worries weighed down on the US Dollar, this helped to shore up demand for higher-yielding assets such as the ‘Kiwi’. Even so, NZD exchange rates may struggle to hold onto a positive footing for long as markets brace for another negative ANZ business confidence index reading.
As long as sentiment remains planted firmly in negative territory, fears of another quarter of weak economic growth look set to weigh on the New Zealand Dollar.
Data Releases
10:00 NZD ANZ Business Confidence Index (Sep) -40.5
11:30 AUD Private Sector Credit (Aug) 0.1%
16:00 GBP Gross Domestic Product (Q2) -20.4%
17:55 EUR Unemployment Rate (Sep) 6.4%
22:30 CAD Gross Domestic Product (Jul) 3%
22:30 USD Gross Domestic Product (Q2) -31.7%