The Pound began the week in a stronger position against both the Euro and US Dollar having advanced on Friday in response to the outcome of the Scottish referendum. A lack of market moving UK data could restrict Sterling fluctuations in the hours ahead, but the currency is likely to continue trending in its present range against peers like the Australian Dollar as commodities struggle.
Expectations that the Federal Reserve will bring forward its timeline for increasing interest rates boosted the US Dollar against its currency counterparts last week. Although US inflation figures for August disappointed forecasts, it is still believed that the Fed will hike borrowing costs in the spring of 2015. Today’s US Existing Home Sales report could inspire ‘Greenback’ movement in the hours ahead.
While the Euro was over 0.4% stronger against the Australian Dollar on Monday, the common currency was slightly softer against the Pound and trending in a fairly narrow range against the US Dollar. Over the weekend a prominent European Central Bank official intimated that the recent weakening in the Euro could negate the need for additional stimulus. Today’s Italian Industrial Orders/Sales data detailed sharp declines in July.
As well as sliding against the Pound and Euro, the Australian Dollar fell to a seven-month low against the US Dollar overnight. The commodity-driven currency is coming under pressure from all sides ahead of this week’s influential Chinese Manufacturing PMI. While a strong manufacturing print for Australia’s main trading partner could bolster the ‘Aussie’, some industry experts have forecast that it could fall below 80 cents in the medium term.
New Zealand Dollar
Over the weekend New Zealand’s election resulted in victory for the National Party, and the ‘Kiwi’ broadly strengthened as a result. The New Zealand Dollar rallied against the US Dollar but continued trending 0.3% lower against the Pound. Tomorrow’s HSBC Manufacturing PMI for China could have an influence on the direction the New Zealand Dollar takes this week.
After advancing on its peers on Friday thanks to a stronger than anticipated Canadian Consumer Price Index, the Canadian Dollar pared some of its gains as trading began on Monday. The GBP/CAD pairing lost over 0.3%. Today the Bank of Canada’s Deputy Governor is due to speak at the CFA society, the tone of the comments could cause ‘Loonie’ volatility.
South African Rand
With no influential economic reports for South Africa due for publication until Thursday, the Rand’s performance this week will be largely dependent on global economic developments. Economists are anticipating that the Rand will maintain a fairly stable outlook for much of the week.
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