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Euro Downtrends as Eurozone Investor Confidence Slips Today, ?Aussie? Gaining on Construction PMI Growth

Published: 7 Sep at 11 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany,

Pound Sterling
Although last week’s underperforming UK PMIs saw Sterling cede much ground to its major rivals, the prospects of the currency have started to improve somewhat today as the FTSE 100 began to climb. This was likely due to commodities trader Glencore announcing moves to significantly cut its debt, majorly increasing demand for stock and driving up the whole index as a result. Otherwise the Pound is benefitting most strongly from the relative weakening of competitors as investors must wait until the middle of the week for any major UK economic data releases.

After the dovishness of European Central Bank (ECB) President Mario Draghi’s recent comments on the probability of near-term easing measures wore off over the weekend, the Euro was initially bolstered this morning by a better than expected annual German Industrial Production figure. While the result still fell from the previous month’s, it only dropped to 0.5% instead of the 0.3% that pundits had been anticipating, suggesting that the situation in the currency bloc’s major economy was not quite so concerning as thought. However, as the Eurozone’s Sentix Investor Confidence figure for September was significantly diminished to clock in at a seven-month low, the single currency has since returned to a strong general downtrend.

US Dollar
There is little activity for the ‘Greenback’ today due to a US bank holiday, although traders do not appear to be appreciating the break in data as speculation remains rife over the possibility of an imminent Fed interest rate hike. As Friday’s Change in Non-Farm Payrolls fell short of forecast, while the domestic Unemployment Rate reached a seven-year low of 5.1% the prospect of a September Fed take-off seemed no clearer than before. Given that these two particular figures are considered to have a distinct impact on the direction of the Federal Open Market Committee (FOMC) the market reaction was naturally a little mixed.

Australian Dollar
Having weakened to some multi-year lows on the back of the US jobs data, and bets as to the chances of a Fed hike coming before the year is out, the ‘Aussie’ was rescued this morning by an impressive turnaround on the domestic Construction PMI. Unexpectedly rising from 47.1 to 53.8, this pushed the index to its highest level in eleven-months to signal that the Australian construction industry has returned to a state of expansion. With the value of metals somewhat improved the antipodean currency has consequently produced a strong rally against rivals.

New Zealand Dollar
Equally at the mercy of Fed interest rate rise speculation and sensitive to any continuing Chinese instability, the ‘Kiwi’ has remained on a downturn as expectations point to further declines on the Asian stock markets. Lacking any major economic data over the next day the South Pacific currency is likely to remain dovish ahead of Wednesday’s Reserve Bank of New Zealand (RBNZ) Rate Decision.

Canadian Dollar
Once again oil values have fluctuated, having fallen early on Monday due to renewed drops on the Chinese stock market and the continuing pressure of the current global glut before recovering somewhat as Labour Day is expected to lead to a reduction in US stockpiles. After the Canadian Unemployment Rate on Friday proved to be disappointing, rising from 6.8% to 7%, the ‘Loonie’ is still struggling to strengthen sufficiently.

As of Monday, 7th September 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3673, GBP USD exchange rate was 1.5275, GBP AUD exchange rate was 2.2021, GBP NZD exchange rate was 2.4373, GBP CAD exchange rate was 2.032, and GBP CNY exchange rate was 9.7239.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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