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Unimpressive Construction Growth Dents Australian Dollar (AUD) Exchange Rates

Pound News: Halifax Points Towards Slowing UK Housing Market

The Halifax house price data for December proved rather discouraging for Pound (GBP) exchange rates, with prices showing a surprise contraction on the month.

While the ultimate impact of Theresa May’s much-anticipated cabinet reshuffle proved to be rather limited this was not enough to shore up the Pound during trade on Monday.

Even so, as anticipation builds for tomorrow’s raft of UK trade and production data the mood of GBP exchange rates is likely to remain bearish in the short term.


Euro News: Weaker Consumer Inflation Expectations Weigh on EUR

Although the latest raft of Eurozone data offered further signs of robustness, with investor confidence surging on the month, this failed to boost the Euro (EUR) yesterday.

An unexpected dip in consumer inflation expectations encouraged bets that the European Central Bank (ECB) will leave monetary policy on hold for some time to come, to the benefit of the Pound to Euro (GBP/EUR) exchange rate.

However, as the Eurozone unemployment rate is forecast to fall once again today the appeal of the Euro could still pick up somewhat.


US Dollar News: USD Exchange Rates Rebound on Hawkish Fed Comments

Comments from San Francisco Fed President John Williams prompted US Dollar (USD) exchange rates to surge higher on Monday, with markets reacting to his hawkish tone.

As the policymaker indicated that he sees interest rates rising three times in 2018 this increased bets that the Federal Reserve could adopt a more aggressive pace of monetary tightening in the coming months.

With another uptick in small business optimism forecast for the December NFIB index the Pound to US Dollar (GBP/USD) exchange rate could see further losses tonight.


Canadian Dollar News: Boost from Improved Unemployment Rate Fades

After the strong gains seen on Friday the Canadian Dollar (CAD) reversed course at the start of the week, failing to hold onto its positive momentum for long.

Even though the odds of the Bank of Canada (BOC) raising interest rates next week have increased sharply the upside potential of CAD exchange rates remained limited, prompting a bout of profit taking.

A solid reading from the latest Canadian housing starts figure may return the Canadian Dollar to a stronger footing, encouraging greater confidence in the domestic housing market.


Australian Dollar News: AUD Softens as Construction PMI Slows Sharply

The Pound to Australian Dollar (GBP/AUD) exchange rate received a fresh boost from the Australian construction PMI, which slipped from 57.5 to 52.8 in December.

Despite the sector remaining in a decent state of expansion this latest disappointment increased the downside pressure on the Australian Dollar (AUD), especially as Fed rate hike bets rose.

If building approvals contracted on the month in November as forecast the GBP/AUD exchange rate could see further gains today.


New Zealand Dollar News: NZD Exchange Rates Recover Ground Despite Risk Aversion

Although market risk appetite eased in response to a stronger US Dollar the Pound to New Zealand Dollar (GBP/NZD) exchange rate struggled to capitalise on this.

Demand for the New Zealand Dollar strengthened across the board on Monday, with investors buying back into the currency as a result of its relative weakness.

However, as domestic data remains elusive in the near term NZD exchange rates may struggle to sustain any positive momentum for long.


Upcoming Data

Tuesday, 09 January 2018

10:00     Eurozone Unemployment Rate

11:00     US NFIB Small Business Optimism

13:15     Canadian Housing Starts


Jack Wiles

Currency Dealer

01442 892 073

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