The Pound weakened broadly against the majority of its peers on Tuesday as inflation data and poor retail sales figures sent the currency lower. Inflation in the UK slowed to a five year low and a report released by the British Retail Consortium showed that the UK retail sector experienced its worst sales performance since December 2008. Further losses were restrained on Wednesday as the market awaits the latest domestic unemployment and average earnings data.
The US Dollar made gains against most peers on Wednesday as the US economy’s momentum diverges from that of the Eurozone. Fears over the Ebola virus, the conflict in the Middle East and a slowdown of the global economy also bolstered demand for the safe-haven ‘Greenback’.
The Euro remained under pressure from concerns that the Eurozone is heading towards a triple dip recession. Further falls were limited however, after a report released early in the session showed that inflation in Germany remained stable at 0.8% in September. The annual inflation rate out of Europe’s largest economy is keeping pressure on the ECB as Eurozone consumer price data continues to languish below the central bank’s medium-term target of just below 2%.
The ‘Aussie’ firmed against a number of rivals after inflation data out of China came in better than expected. A domestic Consumer Confidence report surprised expectations by rising by 0.9% following the previous month’s decline of -4.6%. New Motor Vehicles Sales also increased.
New Zealand Dollar
The New Zealand Dollar eased as investors looked ahead to the latest GlobalDairyTrade auction, which is likely to show a further fall in dairy prices. Whole milk powder prices fell 10% in the last auction held Oct. 1 and are down more than 50% since a February peak.
The ‘Loonie’ tumbled to its lowest level since 2009 against the US Dollar on worries that falling oil prices could damage the nation’s trade balance and reduce investment in Canada’s leading commodity. The value of crude oil is now at its lowest level in four years as global production continues to outstrip demand.
South African Rand
The Rand softened against the Pound and other peers as risk aversion continued to dominate market sentiment. Economists are also expecting the day’s retail sales data to come in weakly.
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