Pound Sterling (GBP)
The British Pound softened versus the majority of its most traded currency rivals on Monday morning after housing price data produced a mixed-bag of results. Whilst December’s Rightmove House Prices advanced by 7.4% on the year, the monthly figure saw a -1.1% contraction. The monthly contraction may indicate that housing prices have peaked and face downside risks, easing pressure on the Bank of England (BoE) to hike rates to prevent a housing bubble.
Eurozone Industrial Production data produced better-than-forecast results on both an annual and monthly basis in October, but the Euro is trending lower ahead of a speech from European Central Bank (ECB) President Mario Draghi. The depreciation can be attributed to a stronger US Dollar as trader focus is dominated by Wednesday’s European session. Many investors remain convinced that Federal Reserve hawkishness will prompt ECB policymakers into expanding stimulus.
US Dollar (USD)
As mentioned above, the US Dollar advanced versus many of its currency rivals in response to positive forecasts regarding Wednesday’s Fed interest rate decision. With crude oil prices dropping to a seven-year low there is also heightened demand for safe-haven assets which has supported demand for the US asset. With an absence of influential domestic data to provoke changes the USD is likely to respond to market volatility and Euro movement today.
Australian Dollar (AUD)
Despite the fact that crude oil prices slumped and the commodities rout continues to weigh heavily on Australian trade, the Australian Dollar advanced versus the majority of its currency rivals in the early stages of Monday’s European session. The appreciation can be linked to news from the People’s Bank of China (PBoC) that the reference rate was cut to a four-year low. It is possible that investors will continue to support the ‘Aussie’ (AUD) ahead of the Fed rate decision which is likely to devalue the South Pacific asset considerably; pushing the trade weight back to appropriate levels.
New Zealand Dollar (NZD)
After the PBoC cut the reference rate, which caused the Shanghai Composite Index to end the Asian session just over 2.5% higher, the New Zealand Dollar gained versus many of its peers. Also providing a tailwind was November’s Performance of Services Index which rose from 56.5 to 59.8. With an absence of further data to provoke changes the ‘Kiwi’ (NZD) will likely see movement in response to high-yield demand and US Dollar movement.
Canadian Dollar (CAD)
Crude oil prices dropped to a seven-year low after Iranian producers vowed to add to global supply which is already well beyond necessary levels. However, the Canadian Dollar is considered significantly undervalued by many traders which has caused the ‘Loonie’ (CAD) to rise irrespective of the significant drop in crude prices.