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?Aussie? Struggling in Wake of Chinese Manufacturing Shortfall, Euro Holding Strong in Spite of Weakening Eurozone PMIs

Published: 23 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, France, Germany,

Pound Sterling
After yesterday’s disappointing UK Public Sector Net Borrowing figure the Pound has remained on a persistent downtrend across the board. Sterling must now look to tomorrow’s BBA Loans for House Purchase data for the hope of a rally and the chance to claw back some of its recent gains. As forecasts suggest that the figure will see an improvement upon the previous month, up at 47,000 from 46,033, the floundering currency may produce a significant turnaround. However, it seems unlikely that speculation of a near-future Bank of England (BoE) interest rate rise will return to shore up the Pound further even with a more positive showing.

This morning’s raft of German and Eurozone PMIs proved disappointing, as the majority declined further than had been forecast with the German manufacturing index in particular falling short. While production in the Eurozone’s powerhouse decreased, however, the French Manufacturing PMI unexpectedly returned to a state of expansion as the index edged over the neutral baseline of 50 at 50.4. The common currency has, nevertheless, escaped any particularly negative impact from this data today, in part thanks to a resurgence in risk aversion that has driven investors back towards the relative safe-haven.

US Dollar
Still buoyed by Tuesday’s better than expected US House Price Index, which rose at twice the rate expected to show growth of 0.6%, the ‘Greenback’ has remained on generally strong form against many of the majors today. Speculation that the Federal Open Market Committee (FOMC) may opt to raise interest rates before the end of the year has continued to bolster the ‘Buck’ as the domestic September Manufacturing PMI defied expectations to hold in a state of steady growth at 53.

Australian Dollar
The early hours brought bad news for the ‘Aussie’ and other risk-sensitive currencies as the latest Chinese Manufacturing PMI revealed another contraction in the industry’s output. Instead of positing a slight improvement at 47.5 as had been anticipated, the index slipped to 47 and its lowest level since 2009. As a result, and in spite of an improvement on the Australian Conference Board Leading Index, the antipodean currency has remained on a substantial downturn against many of its rivals.

New Zealand Dollar
Ahead of this evening’s New Zealand Trade Balance, Imports and Exports figures the ‘Kiwi’ has also suffered some softening due to this new evidence of a continued slowdown in China. With pundits anticipated a widened deficit and lowered exports the South Pacific currency stands to slump further tonight, unless this fresh data proves more significantly supportive for the ‘Kiwi’.

Canadian Dollar
As the latest signs of slowdown in the world’s second largest economy weigh on the price of oil today, the ‘Loonie’ was further weakened as a result of less than impressive month-on-month Canadian Retail Sales for July. Although sales did pick up from the previous month, showing growth of 0.5%, this was not equal to the forecast 0.7% which traders had been hoping for.
As of Wednesday, 23rd September 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3627, GBP USD exchange rate was 1.5248, GBP AUD exchange rate was 2.1796, GBP NZD exchange rate was 2.4318, GBP CAD exchange rate was 2.0322, and GBP CNY exchange rate was 9.734.
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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