The Pound regained ground against the US Dollar and Euro on Tuesday as investors awaited the release of the latest UK Manufacturing and Industrial Production data, which is forecast to show improvement. If the data does come in positively then concerns that the UK economy is slowing will likely ease and offer support to the currency.
The US Dollar rebounded from its biggest decline in 12 months yesterday. Investors raised their bets for the Federal Reserve to increase interest rates next year. The currency continued to find support from last Friday’s data, which showed that the US economy created more jobs than expected and saw the unemployment rate fall.
The Euro was back under pressure on Tuesday as economic data released early in the session showed that industrial production in Germany fell more-than-forecast in August. Production tumbled by 4% on a monthly basis, the biggest decline since 2009. The poor data adds to yesterday’s dire German factory report data and raises concerns that the Eurozone is sliding back towards recession.
The ‘Aussie’ firmed against the US Dollar and other peers after the Reserve Bank of Australia left interest rates unchanged at 2.5%. Policy makers tried to talk down the currency by saying that the ‘Aussie’s’ recent drop is still not enough to spur on economic growth.
New Zealand Dollar
The New Zealand Dollar followed its Australian relation higher despite the release of data that showed that business confidence in the smaller South Pacific economy fell in the third quarter of the year.
The ‘Loonie’ inched higher on Monday after the latest Ivey PMI report came in at its strongest level in almost a year. Despite that, the currency softened as commodity prices continued to fall and as a report revealed that the Canadian government’s spending fell to its lowest level in half a century as it cuts deficits and balances the books.
South African Rand
The Rand continued to feel the benefits of Lesetja Kganyago’s appointment to the head of the South African Reserve Bank. The markets deemed the move as a positive as Mr Kganyago is a staunch defender of the bank’s independence.
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