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Brexit Speculation Keeps Sterling Steady, US-China Trade Jitters Continue

Pound News: Hopes for Smoother Brexit Talks Keeps Sterling Afloat

Despite a lack of fresh Brexit developments or UK political news on Thursday, the Pound held firm against most major currencies as Wednesday’s Brexit news kept markets relatively optimistic.

On Wednesday, a report suggested that Germany and the UK had softened stances on some of the more contentious Brexit issues, boosting hopes that negotiators were prioritising some kind of deal being made rather than allowing negotiations to collapse or lead to a ‘no-deal’ Brexit.

There will be no notable UK data published today, so the Pound will be driven by any late-week Brexit developments as investors anticipate next week’s UK Gross Domestic Product (GDP) growth results.

Euro News: German Factory Results Disappoint

The Pound to Euro exchange rate’s advance on Thursday was made easier thanks to the day’s underwhelming Eurozone datasets. Germany’s July factory orders report was particularly concerning.

The factory orders report was forecast to improve to 1.8%, but instead the contraction only lightened from -3.9% to -0.9%. The data indicated that US trade protectionism was causing uncertainty among German businesses and having a negative impact on activity.

Some of the week’s most influential Eurozone datasets will be published today, including the bloc’s Q2 Gross Domestic Product (GDP) growth rate figures and Germany’s July trade balance report.

US Dollar News: Underwhelming US Data Helps GBP/USD Recovery

Following the disappointing US trade data on Wednesday, Thursday saw the publication of ADP’s US employment change report from August, and July’s US factory orders results.

Both reports fell short of forecasts, which dampened US Dollar demand and made it easier for the Pound to US Dollar exchange rate to advance. ISM’s non-manufacturing PMI for August did beat expectations though, which limited GBP/USD gains.

August’s anticipated US Non-Farm Payroll report will be published today and has the potential to cause some late-week US Dollar movement. If investors continue to find safe havens appealing, the US Dollar is likely to remain resilient.

Canadian Dollar News: NAFTA Uncertainty Keeps Pressure on CAD

Investors remain anxious about this week’s US-Canada trade negotiations, especially after the Bank of Canada (BoC) said on Wednesday that it was carefully watching talks before making a decision to hike Canadian interest rates again.

The Canadian Dollar saw further weakness on Thursday, as Canadian building permits from July contracted -0.1% rather than rising to 1.3% as forecast.

Any developments in US-Canada trade talks could influence the Canadian Dollar before markets close this week, but Canada’s August job market stats today could prove influential too.

 

 

Australian Dollar News: Australian Dollar Fluctuates on Trade Speculation

Although risky trade-correlated currencies like the Australian Dollar have been made unappealing by worsening US-China trade tensions, a forecast-beating domestic trade surplus lent the ‘Aussie’ some support.

The Australian Dollar isn’t likely to be hugely influenced by today’s Australian home loans data, so investors will pay close attention to US-China trade tensions and risk-sentiment instead.

Upcoming Data

Friday, 7th September

02:30    Australian Home Loans

02:30    Australian Investment Lending for Homes

07:00    German Trade Balance

07:00    German Industrial Production

07:45    French Trade Balance

09:30    UK Consumer Inflation Expectations

10:00    Eurozone Growth Rate

13:30    Canadian Job Market Report

13:30    US Non-Farm Payrolls Report

15:00    Canadian Ivey PMI

 

Alastair Archbold

Currency Dealer

aja@fcgworld.co.uk

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