Australian Dollar makes small advances
26 August 2016 by csf-admin
Australian Dollar could face uncertainty among investors going forward as budget changes will be difficult due to the coalition’s narrow majority in parliament, which could see Labor blocking reforms, according to currency specialists TorFX
Elsewhere, a new study has revealed that two million Australians experience such pressure on their finances that they cannot cope with unexpected expenses.
New Zealand Dollar – Like the Australian Dollar, the New Zealand Dollar is benefitting from low demand for safe-haven currencies ahead of the conclusion of the Federal Reserve summit.
The ‘Kiwi’ rise is also fuelled by correctional trading after yesterday’s drop, but if Janet Yellen signals tighter monetary policy is on the horizon, the New Zealand Dollar is likely to plummet.
There is no domestic data due today to provide support or resistance for the ‘Kiwi’, leaving it entirely in the hands of external market forces.
Australian Dollar makes small advances
Pound Sterling – Markets have yet to react to the day’s UK data, despite the positive results. Gross domestic product held steady on preliminary figures, according to the latest estimates.
Business investment figures were revised higher for the second quarter, showing unexpected growth of 0.5%, while year-on-year investment remained at -0.8% instead of worsening. The index of services for the three months to June rose above forecasts to hit 0.5%.
The data has had little impact due to the fact that the GDP figures are the second set of estimates, not the final figures nor the first time traders have seen approximations of second-quarter growth for the UK. Also negating the impact of what would usually be an encouraging rise in business investment is the fact it reflects a pre-Brexit Britain and is therefore moot in the eyes of many.
Euro – It looks set to be a lacklustre day of trading ahead of Janet Yellen’s key speech at the Federal Reserve’s Jackson Hole Symposium. As a result the Euro is trending largely below negative levels.
A marginal increase in German consumer confidence, with the GfK survey index climbing from 10 to 10.2 has failed to counter the more marked movement in business sentiment, which surprised to the downside. Spanish retail sales bettered expectations, while French GDP figures showed no growth on the quarter as forecast.
US Dollar – Unsurprisingly, the US Dollar is weak today ahead of Janet Yellen’s speech. Investors are going to be reluctant to adjust their positions before they can establish the future path of US monetary policy.
Hopes are for talk of tighter monetary policy, but the Fed is no stranger to disappointing markets with surprisingly dovish rhetoric. Headline figures on the calendar include the advance goods trade balance, annualised second-quarter GDP and the GDP product price index.
Unless the figures deviate significantly from forecasts or current readings, their impact may be uncharacteristically minimal with Yellen just around the corner.
Canadian Dollar – Jackson Hole is also weighing on the Canadian Dollar, keeping the ‘Loonie’ weak as well. The ramifications of the meeting will be felt in Canada; the US is a strong trade partner for Canada, so USD strength makes both importing and exporting less lucrative for Canadian businesses.
Despite headwinds from that, the outlook of the Canadian economy could be improving, thanks to news from several major banks that profits are up. This is an encouraging sign considering low interest rates in Canada are putting pressure on the banking sector.
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