Australian Dollar (AUD) Softens as Markets Remain Cautious
The Australian Dollar (AUD) failed to push higher ahead of the weekend as risk-off trade continued to weigh on the ‘Aussie’.
Meanwhile, the third quarter producer price index also failed to support Australian Dollar exchange rates as it came in below expectation at 0.4%, instead of the 0.7% forecast.
As markets brace for a dovish Reserve Bank of Australia (RBA) policy announcement tomorrow and the upcoming US presidential election, support for the Australian Dollar is unlikely to improve.
Pound (GBP) Holds Ground amid Lack of Brexit News
The Pound (GBP) held onto a positive footing against many of the majors during Friday’s European session in the absence of any news on Brexit progress.
The strength of the Pound proved limited, however, with the UK economy looking set to come under greater pressure in the final months of the year thanks to the Covid-19 resurgence.
Confirmation that the UK manufacturing PMI softened on the month in October could expose GBP exchange rates to additional selling pressure today.
Euro (EUR) Stumbles despite Stronger-than-Expected Growth
The Euro (EUR) struggled during Friday’s European session as September’s German retail sales saw a dramatic -2.2% decline on the month, with consumer spending in the Eurozone’s powerhouse economy already showing signs of deteriorating.
The Euro fell despite the third quarter Eurozone GDP seeing a record 12.7% surge on the quarter as anxiety over the fourth quarter outlook continued following Germany and France’s announcements of lockdown restrictions.
Even if the Eurozone manufacturing sector shows signs of resilience in the finalised October PMI, this may not be enough to lift EUR exchange rates this evening.
US Dollar (USD) Limited as Personal Consumption Expenditure Misses Forecast
The US Dollar (USD) was muted before the weekend as the US personal consumption expenditure (PCE) price index missed forecasts in September.
As the core PCE remains the Federal Reserve’s preferred gauge of inflationary pressure, its failure to pick up as far as forecast dented USD exchange rates.
A solid showing from the ISM manufacturing index could help to limit the weakness of the US Dollar ahead of the US presidential election.
Canadian Dollar (CAD) Fails to Benefit from Better-than-Forecast GDP
The Canadian Dollar (CAD) slipped lower across the board even as August’s GDP reading bettered forecasts.
While the monthly growth rate only slowed from 3.1% to 1.2%, as opposed to 0.9%, this failed to encourage any particular rally for CAD exchange rates. As fresh European lockdowns dampened global oil prices due to weakening demand levels, the appeal of the commodity-correlated Canadian Dollar diminished.
Nevertheless, a solid showing from the Canadian manufacturing PMI may help to improve demand for the Canadian Dollar tonight.
New Zealand Dollar (NZD) Dented in Risk-Off Trade
The New Zealand Dollar (NZD) struggled to make gains at the end of last week as risk-off trade weighed on NZD exchange rates.
However, the New Zealand Dollar benefitted modestly from a solid improvement in the latest ANZ Roy Morgan consumer confidence index, suggesting the New Zealand economy remains buoyant, although weaker levels of global market confidence diminished the appeal of risk-sensitive assets.
The New Zealand Dollar will likely continue being driven by market sentiment, as markets prepare for the US election.
Data Releases
08:45 NZD Building Permits (Sep) 1%
09:00 AUD Manufacturing PMI (Oct) 54.2
20:00 EUR Eurozone Manufacturing PMI (Oct) 54.4
20:30 GBP Manufacturing PMI (Oct) 53.3
01:30 CAD Manufacturing PMI (Oct) 55.7
01:45 USD ISM Manufacturing Index (Oct) 55.6