AUD Exchange Rate Down on Poor AiG Construction Reading
The Australian Dollar (AUD) dropped this morning on some recent poor construction figures.
The AIG/housing industry association’s Australian performance of construction index dropped to 52.8 in December, down from the previous period’s 57.5 in November and marking the slowest expansion in construction in eight months.
This resulted from a contraction in new orders and smaller jumps in employment.
Looking ahead, concerns continue to reign that China’s efforts to tackle pollution will curb certain commodity exports from Australia – particularly coal.
Nonetheless, the recent hawkish HSBC report that suggested a rate hike mid-2018 keeps the medium-term AUD outlook relatively robust.
GBP Exchange Rates Fluctuate Against Majors, May Reshuffles Cabinet
The Pound (GBP) kicked off the trading week on somewhat mixed form, rising slightly against the Euro (EUR) on Monday but falling against the reinvigorated US Dollar (USD) and Canadian Dollar (CAD).
On the data front things are mostly sparse for the UK, although according to a poll by the manufacturers’ organisation EEF and the insurance firm AIG, 40% of companies questioned have a positive growth outlook for 2018, whilst only 19% were expecting a downturn.
Manufacturers anticipate that robust growth in key export markets will sustain order books, though there are still worries that the UK’s exit from the EU will dominate in 2018 – especially regarding rising input costs and loss of staff.
Nonetheless, this upbeat news helped buoy the Pound.
On the political front, May is being urged by various Tory MP’s to use the reordering of the Cabinet to inject new life into a government that has, as times, struggled with such a small parliamentary majority.
It should be pointed out that May is not expected to axe senior ministers, with Chancellor Philip Hammond, Foreign Secretary Boris Johnson, Home Secretary Amber Rudd and Brexit Secretary David Davis all tipped to remain at their posts.
She is expected, however, to task a minister with the development of contingency plans in the eventuality of a ‘no-deal’ exit from the EU.
GBP EUR Exchange Rate Climbs Despite Upbeat Eurozone Data
The Pound Euro (GBP EUR) exchange rate inched ahead on Monday amid some mixed Eurozone ecostats.
The Eurozone’s business climate indicator increased to 1.66 in December, up from the previous period’s 1.49 and smashing the forecast of 1.5.
This marked the highest reading since the series began in 1985, with managers’ appraisals of finished product stocks, overall order books and future production vastly improving.
In other news, retail sales in the bloc jumped to 2.8% year-on-year in November, up from the previous period’s downwardly revised 0.2% and the forecast of 2.2%.
Negatively, however, German factory orders fell month-on-month from 0.0% previous to -0.4% in November, significantly below the forecast of 0.5% growth.
This negative news proved enough to hamstring the Euro, particularly with the US Dollar (USD) currently rallying.
GBP USD Exchange Rate Tumbles on Fed Williams Comments
The US Dollar (USD) rallied on Monday as markets responded to comments from San Franciso Fed President John Williams who asserted that he could see three rate hikes occurring this year as originally planned.
‘The economy is doing great, everyone expects us to raise rates gradually… and if the data changes we can respond to that. I’m not worried about inflation suddenly taking off… Something like three rate hikes makes sense to me this year’.
This news comes at a contrast to the view that continually low inflation could cut that number down to 2 and has alleviated some tensions regarding the monetary policy outlook for 2018.
Domestic data on Monday proved sparse for the US, though this evening will see the release of the US consumer credit readings, with a drop forecast from $20.519b to $17.800b.
GBP CAD Exchange Rate Tumbles on Rising Bank of Canada Rate Hike Bets
The Canadian Dollar (CAD) extended its lead against the Pound on Monday, bolstered by last week’s impressively strong labour market stats – particularly the jobless rate sinking to its lowest position in 40 years.
These figures have pushed the probability of a rate hike at the Bank of Canada (BoC) later this month up to a whopping 82.5%, news that caused investor demand in the CAD to soar.
NZD Exchange Rates Ride Optimistic Wave on Surging Dairy Prices and Weaker USD
The Pound (GBP) tumbled against the New Zealand Dollar (NZD) on Monday with the recent surge in global dairy prices keeping the ‘Kiwi’ Dollar afloat.
Risk appetite also remains quite high, even with the US Dollar’s currently solid performance.
The next pertinent data release will be the New Zealand REINZ house sales figures for December, expected on Tuesday.