Australian Dollar (AUD) Capitalises on Strong Chinese Industrial Profits
The Australian Dollar (AUD) strengthened in response to a better-than-expected Chinese industrial profits figure for October.
As profits showed a 0.7% growth on the year, bettering forecasts of a -0.6% decline, this encouraged greater confidence in the health of the Chinese economy. Given that the Australian Dollar commonly functions as a proxy for sentiment towards the world’s second-largest economy, this gave AUD exchange rates a solid lift.
Any improvement in October’s private sector credit data could help the ‘Aussie’ push higher still across the board.
Pound (GBP) Pressured by Brexit Uncertainty
The Pound (GBP) remained on a downtrend on Friday in spite of signs of an improvement in the UK’s Covid-19 R rate, encouraging hopes that the UK pandemic is coming under a degree of control as the second lockdown ends.
Meanwhile, a continued lack of progress towards a UK-EU trade agreement continues weighing on the Pound following Boris Johnson’s comments of ‘substantial differences’ remaining in UK-EU trade talks.
Post-Brexit trade talks will continue acting as a key driver in GBP movement through the week as deadlock continues with the end of the transition phase fast-approaching.
Euro (EUR) Bolstered by Upwardly Revised French Growth Rate
The Euro (EUR) found support at the end of the week on the back of a surprise upward revision to the third quarter French GDP.
A slightly stronger-than-forecast quarterly growth rate gave EUR exchange rates a boost, encouraging hopes for less of a fourth quarter slowdown. As the Eurozone economic sentiment index for November also proved slightly better than anticipated, this gave the single currency an additional leg up against its rivals.
With forecasts pointing towards a sharp decline in Germany’s monthly inflation rate, however, the Euro may soon come under renewed pressure.
US Dollar (USD) Suffers from Lack of Fresh US Data
The US Dollar (USD) struggled to find much traction ahead of the weekend thanks to an absence of fresh US data releases.
As market risk appetite remained elevated thanks to lingering Covid-19 vaccine optimism and stronger Chinese data, room for US Dollar gains proved limited. The relative strength of the Euro also helped to weigh down USD exchange rates due to the negative correlation in the pairing.
Any evidence of a slowdown in November’s Chicago PMI could see the US Dollar shedding further ground as worries over the health of the US outlook pick up.
Canadian Dollar (CAD) Supported by Oil Market Optimism
The Canadian Dollar (CAD) benefitted as oil prices remained on a positive trend during Friday’s European session.
With Brent crude still trending in the region of US$48 per barrel, this helped to limit the downside potential of the Canadian Dollar. In the absence of any particular sense of safe-haven demand, CAD exchange rates were able to hold onto a generally stronger footing.
Slowing growth in building permits for October may limit support for the Canadian Dollar tonight.
New Zealand Dollar (NZD) Shakes Off Underwhelming Consumer Confidence
The New Zealand Dollar (NZD) made gains ahead of the weekend even though November’s ANZ Roy Morgan consumer confidence index dipped.
Although the index eased from 108.7 to 106.9 on the month, this failed to put any particular dampener on the ‘Kiwi’. With market risk appetite generally picking up on the back of a slump in gold prices there was limited room for NZD exchange rate losses.
If the finalised ANZ business confidence index for November confirms another monthly deterioration, however, this could see the New Zealand Dollar weaken.
Data Releases
11:00 NZD ANZ Business Climate (Nov) -15.6
11:30 AUD Private Sector Credit (Oct) 2.1%
20:30 GBP Mortgage Approvals (Oct) 85,000
00:00 EUR Germany Inflation Rate (Nov) -0.7%
00:30 CAD Building Permits (Oct) 5%
01:45 USD Chicago PMI (Nov) 59.2