- Australian Dollar falls vs. Pound and Euro – But AUD/USD stands firm.
- Pound Sterling lifted by Brexit optimism – Merkel suggests agreement could be reached next month.
- EUR supported by ECB speculation – Draghi’s recent inflation comments bolster September 2019 rate expectations.
- USD dips ahead of Fed policy meeting – Rate hike from the bank already priced in by markets.
AUD Puts on Mixed Performance, Markets Braced for FOMC Decision
A slight dip in local consumer confidence and a renewed focus on trade tensions kept the Australian Dollar (AUD) on the back foot yesterday, with the currency modestly extending losses against the Euro and Pound.
However, the Australian Dollar was able to hold its own against the US Dollar as USD exchange rates eased lower ahead of this week’s Federal Reserve rate announcement.
Pound Sterling (GBP) Exchange Rates Buoyed by Merkel’s Brexit Optimism
The Pound (GBP) firmed on Tuesday as German Chancellor Angela Merkel suggested a Brexit deal could be reached in October.
However, Merkel’s accompanying warning that there was more hard work needed from the UK to provide clarity on what it wants out of Brexit prevented the Pound from recording any notable gains.
Looking ahead the Pound could slide back today if the latest retail survey from the Confederation of British Industry (CBI) shows a drop in retail activity this month.
EUR Exchange Rates Edge Higher on ECB Rate Speculation
The Euro crawled slightly higher against the Australian and US Dollars on Tuesday thanks to rising speculation that the European Central Bank (ECB) may target a rate hike earlier than expected next year.
Markets had previously locked in December 2019 as the most likely date for a rate hike from the ECB, but this forecast has been reassessed slightly in light of hawkish inflation comments from ECB President Mario Draghi.
However the Euro may struggle to maintain momentum today, with an empty data calendar providing limited catalyst for movement in EUR exchange rates.
USD Exchange Rates Dip in the Run up to FOMC Rate Decision
Investors shied away from the US Dollar yesterday ahead of the Federal Reserve’s looming interest rate decision.
Although the bank is widely forecast to raise interest rates on Thursday, the move has been priced in for months so an increase may have little impact on USD.
Instead markets will be focused on the bank’s future guidance amid an unclear policy outlook for 2019, with the US Dollar potentially surging if the Fed signals further hikes are on the horizon.
Slow Progress in NAFTA Talks Leaves CAD Limp
The Canadian Dollar came under pressure again yesterday amid concerns that the US and Canada are dragging their feet in the renegotiation of the NAFTA trade deal. The commodity-correlated ‘Loonie’ weakened despite crude prices surging above $82 a barrel.
Trade Data Set to Spark NZD Exchange Rate Movement
Ahead of this week’s all-important interest rate decisions by the Federal Reserve and Reserve Bank of New Zealand (RBNZ), NZD exchange rates are likely to react to today’s local confidence and trade data.
A fall in consumer confidence or an expansion in New Zealand’s trade deficit could send NZD exchange rates lower.
00:00 US Consumer Confidence Index (Sep)
08:00 NZD Consumer Confidence Index (Sep)
08:45 NZD Trade Balance (Sep)
18:30 GBP BBA Loans for House Purchase (Sep)
20:00 GBP CBI Reported Sales (Sep)
Post by TorFX