Pound Sterling: GBP Drops on Brexit Worries
The Pound has shown signs of weakening today, falling against the Euro, the US Dollar and most other peers in the lull before a two-day meeting of EU leaders.
The summit, taking place today and on Friday, will include Brexit as a topic and there are worries that EU leaders will take the UK to task for slow progress this year.
There is a provisional deadline of October for the UK to conclude negotiations, but major issues such as the Irish border still need to be resolved.
If EU leaders do end up criticising the UK for its limited Brexit advances in 2018 then the Pound could fall further due to concerns about a possible missed deadline.
Euro: Better-than-expected Confidence Stats Cause EUR Exchange Rate Gains
This morning’s Eurozone news hasn’t been entirely positive, but it has still been supportive enough to cause Euro gains against the Pound, US Dollar and other peers.
A range of Eurozone confidence measures have produced mixed results; business confidence fell in June, but services sentiment has risen against forecasts.
Other readings have also shown no change or smaller-than-expected declines, so the Euro has ultimately appreciated because of the news.
As well as the upcoming EU summit risking Euro movement today, the single currency could also be affected by this afternoon’s preliminary German inflation rate figures.
The ecostats for June are predicted to show a slower pace of price growth on the month and the year, which might mean that today’s Euro gains are reduced or reversed before Friday.
US Dollar: USD Struggles as Trade War Concerns Grip Markets
US Dollar movement has been volatile today, with the USD appreciating against the Pound and New Zealand Dollar but dropping against the Euro and Canadian Dollar.
This unstable movement stems from concerns that the US’s various trade manoeuvres may end up backfiring and causing harm to the US economy.
On the latter issue, National Retail Federation President and CEO Matthew Shay has opined:
‘A tit-for-tat trade war has erupted and American families are caught in the middle. [Tariffs are] taxes on consumers.’
The US Dollar could make more unified losses this afternoon, if final GDP growth rate figures for Q1 2018 confirm a quarter-on-quarter slowdown.
Australian Dollar: AUD Stages a Recovery as US Dollar Dips
Today’s Australian Dollar movement has seen gains against the Pound and US Dollar, but losses against the Euro and Canadian Dollar.
In a wider context, the AUD has taken a battering against the US Dollar recently, so in the AUD/USD pairing today’s movement could represent the start of a recovery.
There hasn’t been any major Australian economic news, which has left US Dollar weakness as the main source of AUD support.
Australian home sales and private sector credit data will be out on Friday morning; a sharp rise in home sales during May could extend today’s Australian Dollar gains.
New Zealand Dollar: Cautious RBNZ Meeting Causes NZD Exchange Rate Losses
The New Zealand Dollar has fallen against most of its regular currency peers today, only seeing a small advance against the weaker Chinese Yuan.
This poor performance follows the latest Reserve Bank of New Zealand (RBNZ) meeting, where RBNZ policymakers voted to leave interest rates unchanged at 1.75%.
ANZ Bank analysts were disappointed by the event, as they predict the NZ central bank is in no hurry to raise interest rates. A statement read:
‘The accompanying statement was more dovish at the margin, with the [interest rate] to remain at 1.75% “for now”, rather than “for some time to come”.
‘The key message is this: interest rates will remain low for some time yet.’
There is a slim chance of an NZD exchange rate recovery this evening should the ANZ Roy Morgan consumer confidence reading show a significant rise.
Canadian Dollar: CAD Firms after Hawkish Hints from BOC Governor
The Canadian Dollar has appreciated against the Pound, Euro and US Dollar today, thanks to rising trader confidence about a potential interest rate hike.
Although there was initial uncertainty when Bank of Canada (BoC) Governor Stephen Poloz spoke yesterday, traders ultimately concluded that the BoC is on track for a July interest rate hike.
The latest CAD exchange rate gains may prove temporary, however, as Friday afternoon’s CA GDP reading for April could devalue the Canadian Dollar if it shows a forecast-matching slowdown.
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