Australian Dollar risk sentiment low
26 September 2016 by News DeskAustralian Dollar to Pound losses against the 'Aussie' were limited by the market’s mixed appetite for risk-correlated currencies.
Australian Dollar risk-sentiment was also low on Monday as investors returned to the ‘safe-haven’ US Dollar after last week’s USD plunge according to currency specialists TorFX
This allowed Sterling to hold its ground against the Australian Dollar on Monday morning.
New Zealand Dollar (NZD) – The New Zealand Dollar saw similar movement to its antipodean peer, the ‘Aussie’, on Monday, but last week was a different story for the ‘Kiwi’.
Investors were disappointed by the Reserve Bank of New Zealand’s (RBNZ) hints at further monetary easing in the coming months, especially considering the Reserve Bank of Australia had recently indicated that its easing cycle had ended for now.
As a result, the New Zealand Dollar was limp towards the end of last week, allowing even the weak Sterling to hold its ground and cause GBP NZD to end the week near opening levels.
Australian Dollar risk sentiment low
Pound Sterling (GBP) – The Pound plummeted against most of its major rivals on Friday afternoon, hitting new lows against some of them as investors reacted to the week’s news in retrospect, particularly Friday’s Brexit comments from UK foreign secretary Boris Johnson.
In comments released Friday morning, Johnson indicated that the formal process of withdrawing from the European Union (activated by Article 50) would ‘probably’ begin in early-2017. He also believed it could take under two years for the process to be completed with new deals negotiated, as well as claiming that Britain could keep access to the single market after the Brexit.
EU leaders responded by once again reasserting that single market access would not be possible without freedom of movement.
The Pound plummeted due to market concerns that while the Britain was still steaming towards a Brexit, it would not be able to negotiate single-market access.
US Dollar (USD) – The Pound to US Dollar exchange rate hit new September lows on Friday and Monday, and on Monday morning was trending at its worst levels in over a month and near its post-Brexit three-decade-lows.
As Sterling was sold off on the latest Brexit concerns, the ‘Greenback’ Dollar was able to hold its ground better in the foreign exchange market despite last week’s continued slew of disappointing US data.
Markit’s preliminary September US Manufacturing PMI let down expectations of remaining at 52 by slowing to 51.4. Markets have higher expectations for longer-term Manufacturing forecasts and the US labour market, so investors hesitated on selling off the US Dollar once more.
Last Wednesday’s Federal Reserve-inspired USD selloff also appeared to fade, so there is better potential for the US Dollar to hold its ground this week.
Euro (EUR) – The Pound to Euro exchange rate fell by over a cent on Friday and continued to drop on Monday morning, as investors reacted to comments made by officials about the Brexit over the last week. As a result of these Sterling selloffs, GBP EUR hit its lowest levels in three-years.
Euro sentiment was also mixed despite this, as Eurozone PMIs weren’t entirely impressive when they were published on Friday. While private sector activity in France was better-than-expected in every print, Germany’s Services saw in a disappointing drop from 51.7 to 50.6, bringing its Composite PMI down from 53.3 to 52.7. This weighed on the Eurozone’s overall scores, bringing Services down to 52.1 and the Composite down to 52.6.
Fortunately, Manufacturing beat expectations in Germany and in the Eurozone as a whole, scoring 54.3 and 52.6 respectively. This may have supported the single currency on Friday, despite speculation that more underwhelming private sector activity could cause the European Central Bank (ECB) to introduce new Eurozone easing measures.
The Euro was slightly bolstered on Monday morning by IFO’s latest German business sentiment reports for September, which beat expectations in every print.
Canadian Dollar (CAD) – The Pound to Canadian Dollar briefly plunged to a monthly low on Friday, but was able to reverse its losses in the afternoon as Canadian Dollar sentiment plummeted in response to the latest underwhelming Canadian ecostats.
Canadian retail sales contracted at -0.1% in July despite being expected to improve slightly to 0.1%. August’s Consumer Price Index (CPI) also disappointed, as consumer prices contracted at -0.2% month-on-month and brought the yearly score down from 1.3% to 1.1% despite hopes of an improvement to 1.4%.
As the Bank Of Canada (BOC) had recently indicated that new easing measures were possible if Canada’s economic activity did not improve in the second half of 2016, these underwhelming results increased BOC easing bets and the ‘Loonie’ plunged. It recovered slightly on Monday morning.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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