Pound Sterling (GBP)
Sterling resumed bearish trade in the latter stages of yesterday’s European session following a speech from Bank of England (BoE) Governor Mark Carney. The central bank chief warned of the high possibility of policy easing in the next few months. In the early stages of Friday’s European session the Pound continued bearish trade. British manufacturing output bettered expectations in June, but the result had minimal impact given that the data was collected ahead of the UK’s historic decision to vote to leave the European Union. With political turmoil and economic uncertainty weighing on investor confidence, there is a high chance that Sterling will hold losses into the weekend.
After several days of depreciation, the single currency edged higher versus a number of its major peers. This is mostly the result of US Dollar weakness as traders price in long-term delays to a Federal Reserve benchmark interest rate hike. The final figures for German and Eurozone manufacturing output in June eclipsed the respective median market forecasts. However, European ecostats continue to have a muted impact given that the data pertains to a pre-Brexit Eurozone. The reduction in safe-haven demand is also supportive of single currency gains. This is because there is less demand for corporate bonds which means yields will rise, an outcome that suits the European Central Bank‘s (ECB) asset purchase programme.
US Dollar (USD)
Against most of its major peers the US Dollar cooled thanks to reduced demand for safe-haven assets. Markets have now priced in expectations that the Federal Reserve will not look to tighten monetary policy until 2018 at the earliest. Later today, June’s ISM Manufacturing report has potential to provoke USD volatility. However, there is a good chance that market sentiment will overshadow domestic ecostats.
Australian Dollar (AUD)
Although China’s Manufacturing PMI stagnated in June, market sentiment improved. This was thanks to the BoE’s hints at near-term rate cuts and speculation of long-term delays to a Fed rate hike causing global stocks to rise. Also supportive of the ‘Aussie’ (AUD) was domestic data which showed that June’s AiG Performance of Manufacturing Index rising from 51 to 51.8.
New Zealand Dollar (NZD)
Similarly to that of its Oceanic counterpart, the New Zealand Dollar’s performance was improved by rising global equity markets. With a complete absence of domestic data to provoke changes the ‘Kiwi’ (NZD) is likely to hold gains versus its major peers unless there is a significant shift in sentiment.
Canadian Dollar (CAD)
The Canadian Dollar has seen a mixed performance versus its peers today with the market closed for Canada Day celebrations. Whilst risk-appetite is positive for the ‘Loonie’ (CAD), crude oil prices continue to fall. Yesterday’s data showed that April’s Canadian Gross Domestic Product saw an annual growth of 1.5%; bettering the median market forecast 1.4%.