Pound Sterling: GBP Damaged by UK Sales Upset
The Pound has continued its losing streak this week, falling against the Euro, US Dollar and most other peers.
Today’s losses are down to UK retail sales figures for June, which have shown a month-on-month drop into a negative range.
Economists had been expecting slower economic activity, but these readings have significantly lowered GBP trader confidence as they have been worse than forecast.
There are now lower expectations for an August Bank of England (BoE) interest rate hike with the downgrade in outlook cementing GBP exchange rate losses today.
The Pound might see further losses before the weekend, if Friday’s government borrowing figure shows an expansion of the existing deficit.
Euro: EUR Exchange Rate Gains despite Much Significant Data
Despite the handicap of limited Eurozone economic data, the Euro has still been able to rise against the Pound and peers like the Australian Dollar today.
The Euro to US Dollar exchange rate has fallen, but this is more down to a stronger USD than anything else.
The Euro’s stable performance today may be due to residual optimism from yesterday’s confirmation of higher Eurozone inflation.
June’s finalised figures put annual inflation at 2%; this is above the European Central Bank (ECB) target and another sign that an ECB interest rate hike is possible in 2019.
Looking to the coming Monday, the Euro could fall back during the afternoon if July’s consumer confidence flash shows growing pessimism as some are forecasting.
US Dollar: USD Surges as Chinese Yuan Hits One-Year Low
The US Dollar has seen strong gains today, rising by at least 0.3% against the Pound and the Euro and making some major gains against most other peers.
This impressive performance has come from the latest international currency news – the Chinese Yuan has fallen to its lowest level in a year, which has bumped up demand for the more stable USD.
The US Dollar might rise further this afternoon if Federal Reserve policymaker Randal Quarles backs additional interest rate hikes this year.
Australian Dollar: AUD Dips despite Supportive Jobs Market Data
The Australian Dollar has declined against the Pound, Euro and US Dollar today, despite better-than-expected jobs market figures.
The unemployment rate has remained static at 5.4%, but a reported 50.9k people found employment during June.
The unimpressive AUD movement at present may be down to profit-taking when the Australian Dollar initially strengthened, or it could be down to the rising US Dollar lowering risk sentiment.
Next week’s main Australian economic data will be Wednesday’s inflation rate readings for Q2 2018, which could boost the AUD if they show forecast-matching growth.
New Zealand Dollar: NZD Tumbles on Low Risk Sentiment
Like the Australian Dollar, the New Zealand Dollar has performed poorly today because of the recent spike in US Dollar demand.
This has reduced interest in ‘riskier’ currencies; the Australian Dollar and New Zealand Dollar are in this category with their reliance on commodity exports.
A measurement of visitor arrivals to New Zealand will come out this evening; this might boost NZD demand if it shows a rise during June as forecast.
Canadian Dollar: US-Canada Trade Concerns Lower CAD Demand
The Canadian Dollar has fallen against the Euro and US Dollar today, but has conversely made a minor advance against the Pound.
This mixed movement is down to underlying tensions about whether additional US trade tariffs will be imposed on Canadian exports.
The latest worry is that Canadian uranium and vehicle exports to the US could be charged, which might cause significant disruption and turbulence to the Canadian economy and national businesses.
Despite recent losses, the Canadian Dollar could bounce back on Friday when high-impact inflation and retail sales data comes out.
This is predicted to show higher inflation and increasing levels of sales activity in June and May respectively, which could push the Canadian Dollar higher.
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
Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.
Last update: 7 Jan, 2020
The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.
Last update: 7 Jan, 2020