Pound Sterling (GBP)
The Pound softened versus most of its major peers on Monday thanks to heightened safe-haven demand and ongoing uncertainty regarding the UK’s political and economic future. Whilst the two remaining candidates to succeed Prime Minister David Cameron battle it out to win the votes of Conservative party members, opposition leader Jeremy Corbyn is being challenged for the top spot by ex-shadow business secretary Angela Eagle. The tumultuous British political landscape is not making for a favourable investment environment, even as Chancellor George Osborne travels to the US in the hopes of reassuring international investors of the UK’s positive future. With a complete absence of domestic data to provoke changes, the Pound is likely to hold losses for the remainder of Monday’s European session.
Despite the fact that the Italian financial crisis continues to spark concerns of EU destabilisation, and irrespective of renewed optimism for a near-term Federal Reserve rate hike, the single currency edged higher versus most of its major peers. The appreciation is mostly thanks to consolidative trade as investors take advantage of the Euro’s low trade weighting, but also in response to increased short exposure. Rising European stocks also pushed EUR exchange rates higher. Given the potential damaging fallout from Brexit, and fears that Italy’s financial crisis will mark the beginning of the end of the EU and the Eurozone, the single currency is expected to return to depreciation in the coming days.
US Dollar (USD)
Following last weeks improved US labour market conditions, after Non-Farm Payrolls showed a greater-than-expected number of newly employed, bets of a 2016 Federal Reserve cash rate increase improved from 12% to 21%. This pushed the US Dollar higher today, supported further by heightened safe-haven demand as falling crude oil prices weigh on investor confidence. Later today, US Labour Market Conditions Index Change data may provoke volatility.
Australian Dollar (AUD)
As traders flocked to safe-haven assets, the Australian Dollar softened versus a number of its major peers. The Oceanic currency held gains against the New Zealand Dollar, however, thanks to Prime Minister Turnbull retaining office following an uncertain federal election. There is still uncertainty as to whether a coalition will present enough of a majority to hold office, however.
New Zealand Dollar (NZD)
The New Zealand Dollar softened considerably today thanks to reduced risk-appetite and ongoing concerns regarding the falling price of whole milk powder. Even better-than-expected retail card spending in June wasn’t enough to offset ‘Kiwi’ (NZD) losses.
Canadian Dollar (CAD)
As crude oil prices soften on weak Asian cues and Iranian plans for a boost in exports, demand for the Canadian Dollar cooled. Later this afternoon, June’s Housing Starts data may provoke ‘Loonie’ (CAD) exchange rate volatility.