Pound Sterling (GBP)
The Pound was trading poorly against the Euro and US Dollar today, exactly one year before the UK is set to enter the Brexit transitional period.
There are still widespread concerns that the UK government will not be able to finalise Brexit negotiations and arrangements before the late autumn deadline this year.
These perceptions have weakened the Pound, as they also touch on the risk of a possible disadvantageous Brexit deal being hastily agreed.
UK GDP growth data has also proved unsupportive today, slowing down in Q4 2017 compared to Q3 2017 and Q4 2016.
There may be further Pound losses on the horizon next week, when UK manufacturing, construction and services PMI data will be released.
The readings, which are out over April 3 – 5, are tipped to show falling levels of economic activity in all three sectors, which could damage Sterling.
Today’s Euro movement has been varied, with the single currency advancing against the Pound and New Zealand Dollar but falling back against peers like the US Dollar.
The latest data out of the Eurozone has been highly supportive, with the German unemployment rate for March falling from 5.4% to 5.3%.
This is the lowest reported jobless rate in the country since it was reunified in 1990, so has boosted confidence among Euro traders.
There could be further Euro gains this afternoon when Germany’s inflation rate estimates for March will be released.
The preliminary figures are tipped to show growth, which could push the Euro higher against its regular currency peers.
US Dollar (USD)
With the Pound and Euro seeing volatile movement today, the US Dollar has been a more stable currency with steady gains being posted against most of its currency rivals.
The latest US GDP figures showed slowed growth between Q3 and Q4 2017.
Despite this result, the slowdown from 3.2% to 2.9% was a better outcome than the expected 2.7% figure.
The US Dollar might be affected by this afternoon’s personal income and spending figures for February, although at the time of writing no major adjustments were forecast.
Australian Dollar (AUD)
While the US Dollar has shown signs of strengthening today, the Australian Dollar has managed to advance against the Pound, Euro and US Dollar.
This AUD resilience stems from a higher-than-expected private sector credit reading for the month-on-month reading for February.
The rise from 0.2% credit growth to 0.4% was only a minor improvement, but still increased optimism among AUD traders.
Next week’s first major AU news will be the Reserve Bank of Australia (RBA) interest rate decision on Tuesday.
RBA officials might raise Australian Dollar demand if they suggest Australian jobs market conditions could improve noticeably in the coming months.
New Zealand Dollar (NZD)
On a quiet day for New Zealand economic news, the New Zealand Dollar has fallen in value against the Pound, Euro, US Dollar and all other regular peers.
The latest negative factor to weigh on NZD demand has been a report which suggests inequality for Māori citizens could be costing the economy billions each year.
Commenting on the issue, Dr Eruera Tarena of the Māori Futures Collective declared:
‘This isn’t just a social issue. Māori success is an economic issue. It is absolutely about social justice and fair treatment and opportunities for all. But we’ve got to look at how Māori success would positively influence and impact the nation and business.’
Next week’s first notable NZ data will be the Global Dairy Trade price index out on Tuesday. If this shows rising global dairy prices then the New Zealand Dollar could rise in value.
Canadian Dollar (CAD)
The Canadian Dollar has seen stable gains against all of its regular peers today, including the Pound, Euro and US Dollar.
There has been little support from oil price movement recently, so instead the CAD has been influenced by a positive if cautious growth target issued by Finance Minister Bill Morneau.
Mr Morneau has stated that:
‘My goal would be that Canada grew faster than it would have otherwise grown if we hadn’t done the things we’ve done.’
Although this has been criticised by some as an unambitious strategy, it still represents Mr Morneau’s desire to keep the economy ‘ticking over’.
The Canadian Dollar could be influenced by this afternoon’s GDP growth rate data; if it shows growth in January above the predicted 0.1% level then CAD is likely to appreciate.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Last update: 22 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020