The Pound retreated against a number of major peers after UK Business Secretary Vince Cable and the International Monetary Fund both said that the currency is overvalued by 10%-15%. The comments add to those made last week by Bank of England Deputy Governor Ben Broadbent. Sterling could regain some ground if Tuesday’s Manufacturing Production and Industrial Production data comes in positively.
At the start of the week the US Dollar softened slightly due to a drop in the value of a number of commodities. Platinum tumbled by 2.8% to its lowest level since July 2009, Palladium also fell sharply by 2.4%. With a lack of market moving domestic data the ‘Greenback’ will likely see movement because of events elsewhere. Also weighing on the currency was investors locking in profits following last week’s positive jobs data.
The Euro weakened against several major peers after a report showed that German factory orders plunged to the lowest level since 2009, adding to growing concerns over the state of the Eurozone economy. The conflict in eastern Ukraine was blamed for the poor figure. Deteriorating confidence is also undermining a rebound in Germany’s economy from a second-quarter slump.
The ‘Aussie’ made gains against the US Dollar and Pound after domestic data showed that job advertisements increased by 0.9% last month. The positive figure added to the preceding month’s number of 1.6%.
New Zealand Dollar
The New Zealand Dollar edged higher against its peers as the US Dollar weakened on the back of traders locking in profits. Trade is likely to be fairly muted due to the lack of economic data releases and as the Chinese market remains closed for a national holiday.
The ‘Loonie’ was trading close to a six month low against its US relation after data released last week showed that Canada posted an unexpected trade deficit in August. The poor data supported the Bank of Canada’s cautious outlook for the economy. Data released in the afternoon could offer the currency support.
South African Rand
The Rand firmed against the US Dollar but remains close to a six-year low. In the absence of major domestic data, all eyes will be on President Jacob Zuma, who is expected to announce a successor to Reserve Bank Governor Gill Marcus.
The currency is set to be under pressure after South Africa’s main power company received permission to raise prices to more than double the inflation rate, a move that will likely have a negative impact on the South African economy.
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