NZD Plummets after Rate Cut, GBP Dips

Pound News: Sterling Slides on Threat of No-Confidence Vote

The Pound softened slightly against the Euro and US Dollar yesterday thanks to speculation that the UK Parliament will hold a no-confidence vote in the new Boris Johnson government when it returns from summer recess.

Today’s session will once again lack notable UK data. Brexit and political developments continue to drive Sterling as investors await tomorrow’s growth and business investment stats.

Euro News: Euro Supported despite Weak German Outlook

The Euro was able to advance against major rivals including the Pound yesterday, despite a concerning contraction in Germany’s latest industrial production report. The figure came in at -1.5% rather than the expected -0.4%.

On the hunt for safer assets in the midst of global jitters, investors bought into the Euro despite the weak German data. Mixed demand for the US Dollar also gave the Euro additional appeal.

Today’s European Central Bank (ECB) economic bulletin is unlikely to have much influence, leaving Euro investors awaiting tomorrow’s German trade data.

US Dollar News: Mixed Risk-Sentiment Restrains USD

The Pound to US Dollar exchange rate has been trending within a relatively narrow range this week.

While the escalation in US-China trade tensions have driven investors away from higher risk assets, the heightened odds of two further Federal Reserve rate cuts have pressured USD exchange rates.

Some of this week’s more influential US data will be published today in the form of June wholesale sales stats. The US Dollar may benefit if they beat expectations.

Canadian Dollar News: Trade Jitters Keep Pressure on CAD

The Canadian Dollar has been falling gradually this week as the latest round of US-China trade tensions leave investors hesitant to buy trade-correlated currencies like the Canadian Dollar.

The Canadian Dollar is also suffering due to a decline in the price of oil, Canada’s most lucrative commodity.

Canada’s June new housing price index will be published today, but Canadian Dollar investors will be looking ahead to tomorrow’s key Canadian job market report.

Australian Dollar News: Shock Reserve Bank of New Zealand News Drags on ‘Aussie’

The Australian Dollar tumbled yesterday, with the latest Reserve Bank of New Zealand (RBNZ) news bolstering speculation that the Reserve Bank of Australia (RBA) could be pressured to become more dovish soon.

The RBNZ shocked investors yesterday by cutting New Zealand interest rates by 50 basis points rather than the expected 25. The news hit the Australian Dollar too – a result of New Zealand and Australia’s close economic ties.

Continued reaction to the RBNZ news, as well as shifts in market trade sentiment, will drive Australian Dollar movement for the remainder of the day, with investors anticipating comments from RBA Governor Philip Lowe tomorrow.

Upcoming Data

Thursday, 8th August

09:00    ECB Economic Bulletin

13:30    Canadian New Housing Price Index

13:30    US Jobless Claims

15:00    US Wholesale Inventories

Alastair Archbold
Currency Trader
T: 01442 892 062