Pound Sterling (GBP)
The Pound was weakened yesterday by mixed messages from the latest GfK consumer confidence survey. Strong consumer spending has kept the economy afloat since the referendum and had suggested that UK households weren’t too concerned by the prospect of Brexit. However, the latest survey shows that spending has increased due to consumers buying big-ticket items now in order to beat anticipated price rises next year. Overall confidence in the economic outlook for next year worsened, suggesting the services industry could take a hit in the coming months.
Monte dei Paschi, Italy’s third-largest bank and the world’s oldest, failed in its attempt to raise €5 billion from private investors. This made a state bailout an almost certainty; a prospect which, oddly, seemed to improve trader sentiment, keeping the Euro on a bullish rise. The fact that some kind of resolution to the Italian banking crisis was in sight was welcomed, even if it involved the use of €20 billion in public money. Additionally, the latest European Central Bank (ECB) Economic Bulletin predicted inflation was set to rise to a high not seen since 2013, improving the outlook on monetary policy.
US Dollar (USD)
Mixed US data kept the US Dollar trending sideways yesterday. On the plus side, third-quarter GDP performed even better than expected, with the finalised figure rising from 3.2% to 3.5% against predictions of a ten basis point adjustment to previous estimates. But durable goods orders showed a significant -4.6% decline, while personal consumption expenditure – a key measure of inflation – showed slowing growth.
Australian Dollar (AUD)
Western Australia, once dubbed Australia’s economic ‘powerhouse’, released new budget forecasts that showed the region’s deficit was set to hit a record -AU$3.39 billion this financial year. A huge drop off in business investment, payroll tax and stamp tax revenue meant that, not for the first time, government projections were well off the mark. This was even after the recent strong iron ore prices shaved over AU$500 million from the region’s spending. Considering the economic outlook for Australia is already unsteady, given the recent worse-than-expected quarterly contraction, this news unsurprisingly weakened the Australian Dollar.
New Zealand Dollar (NZD)
GDP figures released late on Wednesday night caused a bit of confusion amongst traders yesterday due to the mixed nature of the results. Year-on-year, economic growth undershot forecasts by ten basis points, thanks to a twenty basis point downward revision to the previous reading. This meant GDP clocked in at 3.5%, but the quarter-on-quarter growth rate accelerated to 1.1%, eclipsing forecasts by 0.8%. This caused something of a wobble for the New Zealand Dollar, although by the end of the session the ‘Kiwi’ was advancing firmly.
Canadian Dollar (CAD)
Consumer price index data disappointed investors yesterday and so the Canadian Dollar fell. Experts had already warned price growth was set to slow to 1.4% year-on-year and -0.2% on the month, but the CPI actually printed at 1.2% on the year and -0.4% on the month. Traders may be fearing that today’s GDP figure, which has a slight decline forecast, will repeat this performance.