It was a bit of a whitewash for the Pound at the beginning of the week, with the British currency sliding against all of its most traded currency counterparts in response to the news that Boris Johnson has joined the ‘Out’ camp in the EU referendum campaign. Sterling slid to multi-year lows against the US Dollar, Australian Dollar and New Zealand Dollar over the course of the European session and continued struggling on Tuesday. While tomorrow’s UK BBA Loans for House Purchase and CBI Reported Sales numbers could have an impact on GBP demand, the focus is likely to remain on the EU referendum for the foreseeable future.
Demand for the Euro was stilted on Monday as Manufacturing and Services PMIs for the Eurozone and its largest economies detailed a concerning slide in output. Although the common currency did gain on a broadly struggling Pound, it lost ground to rivals like AUD and NZD. Further EUR losses occurred on Tuesday as the IFO Business Climate and Expectations gauges for February printed below forecast levels. An upcoming speech from an ECB official could be the next cause of Euro volatility.
A surge in appetite for higher risk currencies and a less-than-impressive Markit Manufacturing figure for the US left the US Dollar down against the commodity currencies at the start of the week. However, the ‘Greenback’ decimated the Pound and the GBP/USD exchange rate registered its most significant losses since 2010. Today’s domestic Consumer Confidence index could weaken USD if it shows the decline from 98.1 to 97.3 anticipated.
As a new week of trading got underway the Australian Dollar rallied to a two-month high against the US Dollar and a multi-year high against the Pound. Rebounding commodity prices drove the ‘Aussie’ broadly higher and continued lending AUD support on Tuesday. The ANZ Roy Morgan Weekly Consumer Confidence Index also advanced from 113.6 to 114.3. Upcoming Australian data to be aware of includes the nation’s Skilled Vacancies figure, Wage Cost Index for the fourth quarter and Construction Work Done numbers.
New Zealand Dollar
With demand for higher-risk currencies heightened, the New Zealand Dollar also registered notable gains against the majority of its rivals. While commodity prices were partly responsible for NZD gains, the currency was also bolstered by the fact that the disappointing US Markit Manufacturing PMI reduces the odds of the FOMC opting to increase interest rates in the near future.
Despite rising oil prices, the Canadian Dollar put on a mixed performance over the course of the European session, edging lower against the US Dollar and Australian Dollar while gaining on the New Zealand Dollar and Pound. Canadian news is lacking until tomorrow when the Bank of Canada (BOC) official Lawrence Schembri is scheduled to speak.