Australian Dollar struggles – Sept 1
01 September 2016 by News DeskAustralian Dollar was impacted by difficulty in the commodity bloc, poor oil news and warmer sentiment towards the US Dollar.
The Australian Dollar finally found some solid footing on Thursday despite poor Australian ecostats, according to currency specialists TorFX
The AiG’s manufacturing index report fell from 56.4 to 46.9, while July retail sales stagnated at 0.0% month-on-month.
Steady, high prices of iron ore as well as better-than-expected Chinese trade data boosted the commodity-correlated Australian Dollar on Thursday.
New Zealand Dollar (NZD) – The New Zealand Dollar fluctuated widely on Wednesday and was largely unable to gain any ground.
While GBP/NZD’s range tightened on Thursday, the New Zealand Dollar continued to be among the most in-demand risky currencies thanks to hopes that New Zealand’s economy was sturdy and that there was currently little reason for another Reserve Bank of New Zealand interest rate cut.
Because of this, it was able to easily advance against most major currencies on Thursday morning, while fluctuating against the Pound.
Australian Dollar struggles – Sept 1
Pound Sterling (GBP) – The Pound fluctuated higher against most of its major rivals during Wednesday’s session, and firmed further thanks to better-than-expected consumer confidence and house prices in August. GfK’s consumer confidence survey came in at -7, while Nationwide’s house price print came in at 5.6%.
The Pound was also able to soar even higher on Thursday thanks to an unexpected surge in Manufacturing in August. The UK Manufacturing PMI was expected to come in at 49, but instead improved to a solid 53.3, indicating a rebound from July’s Brexit-vote panic.
Because of volatile short positions however, Sterling could easily plummet if Friday’s Construction PMI results shock markets in some way. Otherwise, the Pound’s recovery rally could continue until next week.
US Dollar (USD) – The Pound to US Dollar exchange rate was able to advance by around half a cent on Wednesday. The US Dollar initially remained sturdy and held the Pound at bay, but Sterling pushed ahead later in the session due to some disappointing US ecostats.
While ADP’s employment change report was optimistic, indicating that a better-than-expected 177k new jobs had been created in August, other figures let the Dollar down. Chicago’s manufacturing PMI fell from 55.8 to 51.5, indicating struggles in the manufacturing sector. This figure didn’t bode well for the US’ overall Manufacturing PMI from ISM, which will be published on Thursday afternoon.
Following the PMI publications, US markets will focus their sights on Friday’s Non-Farm Payroll report. NFPs have recently been the primary source of optimism for the US economy, with Fed policymakers playing up the health of the job market. If Thursday and Friday’s US data scores well, ‘Cable’ could fall.
Euro (EUR) – The Pound to Euro exchange rate spent most of Wednesday fluctuating widely on the upside, but was ultimately able to stage a solid advance, reaching past the key level of 1.18 for the first time since early-August.
Underwhelming Eurozone data held the Euro back on Wednesday and prevented it from holding its ground against Sterling’s recovery attempts.
Eurozone unemployment was expected to improve from 10.1% to 10% in July, but remained at 10.1%. Hopes that Eurozone inflation would improve to 0.3% in August were also let down, as preliminary inflation came in at 0.2%, unchanged from the previous yearly print. The Euro was weakened further on Thursday, as the final August Manufacturing PMI print came in at 51.7, missing preliminary scores of 51.8.
The inflation report in particular will come as bad news to the European Central Bank (ECB) in its quest to stimulate the Eurozone’s economy. To some analysts, this may indicate that the ECB could prepare another round of stimulus as soon as September – or at the very least that the door for further stimulus will remain open.
Canadian Dollar (CAD) – The Pound advanced by almost a cent against the Canadian Dollar, regaining even more of its August losses against the ‘Loonie’ and leaving GBP/CAD at its highest levels in almost a month.
June’s Canadian Gross Domestic Product (GDP) scores came in above expectations, with the monthly score improving to 0.6% and the yearly score rising to 1.1%. However, a disappointing overall Q2 2016 growth figure of -1.6%, as well as news that oil prices continued to slump, prevented the Canadian Dollar from holding its ground.
US oil inventories increased by 2.3 million barrels last week, a million higher than the expected figure of 1.3 million barrels. Due to this and low hopes of an oil production freeze, oil prices dipped.
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