Euro Strengthened by German Construction and Eurozone Retail PMIs, ?Greenback? Remains Dovish after Fresh US Data Disappointments

Published: 6 Oct at 12 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany, Greece,

Pound Sterling
The influence of yesterday’s disappointing UK Services PMI continues to be felt by the bearish Pound, compounded by the pushing back of many traders’ expectations for the date of a potential Bank of England (BoE) interest rate increase. As the Halifax House Price data printed lower than forecast this morning there remains little incentive for investors to favour Sterling.

Euro
While the August German Factory Orders data proved dovish, falling substantially short of estimates on both the year-on-year and month-on-month figure, the single currency has remained generally strong today. In part this is due to the publication of some strengthened Eurozone PMIs, in particular the German Construction and Eurozone Retail indices, as well as the recent meeting of Eurogroup finance ministers. Optimism seems to predominate thoughts of Greece, with the impending creditor review appearing to be on track to secure the Hellenic nation its next tranche of bailout funds, to keep the Euro buoyed as a result.

US Dollar
Monday provided no end to the run of uninspiring US data as the ISM Non-Manufacturing PMI and Labour Market Conditions Index both fell short of forecasts. With bets on a Fed interest rate hike now decidedly favouring 2016, possibly even the second or third quarters of the year, the ‘Greenback’ has remained sluggish. Concerns are certainly on the rise regarding the economic state of the nation, with pundits worried by this latest indication that the wider global slowdown has begun to bite the world’s largest economy.

Australian Dollar
To the relief of the ‘Aussie’ the Reserve Bank of Australia (RBA) opted to leave interest rates unchanged at 2% this morning, easing fears that the central bank might have been prompted into rate cuts by the increasing dovishness of the US outlook. Following the agreement of the Trans-Pacific Partnership trade deal on Monday the antipodean currency has remained on bullish form, making fresh gains across the board.

New Zealand Dollar
The effect upon the ‘Kiwi’ has been less decidedly positive, however, as traders remain undecided as to the extent to which the Trans-Pacific Partnership will benefit the New Zealand dairy trade in the nearer-term. In spite of expectations for tonight’s GlobalDairyTrade auction to demonstrate a sustained increase in the value of milk solids the South Pacific currency has thus entered a downturn.

Canadian Dollar
Also struggling to maintain the gains spurred by the announcement of the Trans-Pacific Partnership, the ‘Loonie’ is today softening against rivals. A round of profit taking has dampened the value of oil, neutralising some of yesterday’s surge on the back of a potential reduction in global production as Brent slipped back to $49.05 per barrel. Traders are equally remaining cautious ahead of the afternoon’s Canadian Purchasing Managers Index and Balance of Trade.
As of Tuesday, 6th October 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3518, GBP USD exchange rate was 1.5231, GBP AUD exchange rate was 2.1273, GBP NZD exchange rate was 2.3285, and GBP CAD exchange rate was 1.9857.

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