Pound Sterling (GBP)
On a quiet start to the week for the UK, the Pound has neared a 1-month high against the Euro and a 10-month high against the US Dollar.
This advance has come as the next set of Brexit talks begin. The first round brought concerning questions about UK-EU citizens’ rights, but Brexit Secretary David Davis has since pledged to make the issue ‘the priority for me’.
Further GBP gains could be seen on Tuesday, when UK inflation figures for June will be released. Annual inflation is forecast to post 2.9% for the second month in a row, which would keep the case for a Bank of England (BoE) interest rate hike valid.
Following the news that Eurozone inflation has slowed annually in June, the Euro has fallen against the US Dollar and traded tightly against the Pound.
With inflation failing to show continuous growth, this lessens the pressure on the European Central Bank (ECB) to tighten monetary policy. By extension, this lowers the likelihood of a near-term ECB interest rate hike.
The Euro might recover on Tuesday, when Eurozone and German ZEW economic sentiment scores come out. The German figure is forecast to show a slight decline, but for the overall Eurozone a rise from 37.7 points is predicted. This latter result might prove the overriding factor in trader sentiment, which could push the Euro higher.
US Dollar (USD)
After a spread of disappointing data last Friday, the US Dollar has made a slight recovery against the Pound and Euro.
This minor appreciation comes after Donald Trump’s ambitious claim that ‘much will be accomplished this week on trade, the military and security’.
Before the President can elaborate on these plans, today’s New York manufacturing data will be published. Forecasts are for a slight slowdown, which may erode previous USD gains.
Australian Dollar (AUD)
Starting the week off on a poor footing, the Australian Dollar has dropped against all regular peers except the weaker New Zealand Dollar.
This near-universal decline has been triggered by a pair of worrying forecasts about the national economy. Concerns have been that with the Australian Dollar nearing a two-year high against the US Dollar, this could have a negative impact on tourism.
As well as AU nationals taking advantage of a strong AUD by holidaying overseas, foreign tourists are also less inclined to visit Australia due to higher prices and worse exchange rates.
Tonight will bring the ANZ Roy Morgan consumer confidence index for mid-July, which could restore confidence in AUD if it shows a higher index score.
New Zealand Dollar (NZD)
Ahead of key domestic inflation figures, the New Zealand Dollar has fallen against the Pound, Euro and US Dollar.
This decline comes on fears that Q2 inflation may slow, lowering the incentive for the Reserve Bank of New Zealand (RBNZ) to raise interest rates.
Canadian Dollar (CAD)
With crude oil prices finally levelling out after a sustained period of growth, the Canadian Dollar has lost its impetus and fallen against most regular peers.
Today’s CA data will cover existing home sales figures for June. If a sharp decline is recorded then the Canadian Dollar could appreciate, as this would lessen the current housing bubble to some extent.
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