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Wed 15 Aug 2018 06:48GMT

Commodity Currencies (AUD, NZD, CAD) on Downtrend in spite of Chinese Holiday, Pound Soft on UK PMIs

Published: 3 Sep at 3 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China,

Pound Sterling

Yet more disappointment for Sterling during Thursday’s European session after the UK Services PMI continued the trend of shortfalls, decreasing markedly on the previous month’s figure of 57.4 to clock in at 55.6. Although the major economic sectors of the UK have remained in a clear state of growth, the slowing numbers are proving to be something of a concern for investors, who are starting to question the current health of the domestic economy. With no other major data due from the nation this week, the Pound is likely to stay in a bearish slump against many of its rivals.

Euro

Investors have been moving cautiously and hedging their bets ahead of this afternoon’s European Central Bank (ECB) Rate Decision, and the accompanying remarks from ECB President Mario Draghi. Since Black Monday, which highlighted the current fragility of the global economy, speculation has been rife that the ECB could be forced to instigate new easing policies, reducing the single currency’s market appeal. While the Euro was earlier buoyed by positive results on the Eurozone’s Services and Composite PMIs, the effect was ultimately limited ahead of the more crucial ECB decision.

US Dollar

Supportive data failed to clearly materialise on Wednesday as US Factory Orders reported a significant decline; from growth of 2.2% to just 0.4%. The Domestic Employment Change was equally less impressive than hoped, with the figure rising positively on the previous but failing to reach the forecast level. As the chances of a Fed interest hike later this month remain uncertain, a strong showing on today’s Non-Manufacturing PMI may provide some much needed stimulus to the ‘Greenback’ (USD).

Australian Dollar

The Month-on-Month Australian Retail Sales data for July did nothing to help the ailing ‘Aussie’ (AUD), even though the domestic Services PMI and Trade Balance both came in positively overnight. In spite of the closure of the Chinese stock markets for the remainder of the week to accommodate a national holiday, the risk appetite of pundits has failed to return. Consequently the antipodean currency is still struggling to regain ground lost after the Australian GDP fell short of expectations.

New Zealand Dollar

In spite of a decided improvement in dairy prices earlier in the week, the ‘Kiwi’ (NZD) is once again down across the board today. Although markets have generally stabilised in the wake of a final round of intervention from Beijing ahead of the Victory Day celebrations, investors have remained leery towards higher risk commodity currencies. Tomorrow’s US data could inspire a resurgence, however, should it prove enough of a disappointment to eliminate the possibility of a Fed interest rate rise later in the month.

Canadian Dollar

Surprising no-one the value of Canada’s key export has remained volatile this week, with oil coming sharply down off its strongest three-day run since 1990. While the temporary closure of China’s stock market might have been expected to offer support to the declining commodity, another marked increase in global stock piles has weighed heavily on demand. The ‘Loonie’ (CAD) could potentially look up on Friday with a round of Canadian Unemployment data, although any movement this may prompt is likely to be tempered by ongoing developments in the oil industry.

As of Thursday, 3rd September 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3718, GBP USD exchange rate was 1.5255, GBP AUD exchange rate was 2.1731, GBP NZD exchange rate was 2.3877, GBP CAD exchange rate was 2.0116, and GBP CNY exchange rate was 9.6958.
Laura Parsons About Author: (357 Posts)Laura works in the financial sector as a currency analyst, studying the latest global economic developments and assessing their impact on the foreign exchange market. Laura uses her currency knowledge to write articles focussing on market movements and trends for several independent financial websites.

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