January’s sharp monthly rebound in UK retail sales was not enough to keep the pound from coming under fresh pressure yesterday.
- Pound climbs as UK wages improve
- Solid signals from construction sector boost Canadian dollar
- US dollar shrugs off dip in small business optimism
Pound gains on solid UK wage growth
The pound found fresh support on the back of July’s UK labour market report, which showed a better-than-expected increase in average weekly earnings.
The 4% increase in earnings suggests that domestic wage growth continued picking up at the start of the second quarter.
In the absence of any additional UK data today, though, GBP exchange rates may struggle to hold onto their latest gains.
With political uncertainty still rife in spite of the prorogation of parliament the outlook for the pound looks set to remain volatile.
Canadian dollar set for gains on signs of rising production
A better-than-expected monthly rebound in building permits encouraged the Canadian dollar to trend higher across the board yesterday.
Although the 3% increase was not quite enough to reverse the previous month’s decline this still signalled greater resilience within the construction sector.
CAD exchange rates may find additional support this afternoon on the back of the second quarter capacity utilisation rate.
Evidence of rising production would give the Bank of Canada (BOC) fresh cause for confidence, further limiting the odds of any monetary easing.
Weakening producer prices may prompt US dollar losses
The US dollar shook off a decline in the latest NFIB small business optimism index, even though signs continue to point towards domestic weakness.
Even so, USD exchange rates could come under renewed pressure if August’s producer price index proves disappointing.
Any decline in producer prices would suggest that inflationary pressure within the US economy is weakening, to the detriment of the US dollar.
With the Federal Reserve already under significant political pressure to cut interest rates further a weak inflation reading would increase the risk of a rate cut.
Wednesday, 11th September 2019
13:30 CAD Capacity Utilisation Rate
13:30 USD Producer Price Index
23:45 NZD Food Price Index
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)