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Will drop in small business optimism weigh on US dollar?

business-articlesWill drop in small business optimism weigh on US dollar?
  • US dollar vulnerable ahead of small business optimism index
  • Weaker building permits figure may dent Canadian dollar
  • New Zealand dollar braces for food price index data
Weakening business optimism set to drag on US dollar
The US dollar could fall out of favour this morning if the latest NFIB small business optimism index weakens as forecast.
Investors expect to see the index ease from 105.0 to 103.1 in June, indicating a continued negative impact from ongoing US-China trade tensions.
As weaker levels of confidence may lead to lower business investment any weakness here could weigh heavily on USD exchange rates.
On the other hand, evidence that business sentiment improved at the end of the second quarter may offer the US dollar a fresh boost.
Canadian dollar vulnerable to building permits disappointment
Although oil prices continued to push higher yesterday this was not enough to support the Canadian dollar as market risk-aversion increased.
This afternoon’s building permits data may see CAD exchange rates struggle to recover their lost momentum.
While permits are expected to see a solid 1.3% uptick on the month in May this would still represent a slowdown on April’s solid 14.7% increase.
With markets still wary of the prospect of weakening Canadian growth, even a positive signal from the construction sector may not be enough to shore up the Canadian dollar.
Rising food price index may boost New Zealand dollar
Confidence in the New Zealand dollar could pick up tonight if June’s food price index points towards a higher level of domestic inflation.
Evidence that food prices picked up on the month would suggest that wider price pressures are also increasing, to the benefit of NZD exchange rates.
Even so, an improvement here is unlikely to be enough to convince the Reserve Bank of New Zealand (RBNZ) to leave interest rates on hold in the months ahead.
As long as the RBNZ still appears on course to cut interest rates imminently the strength of the New Zealand dollar could prove limited.
Upcoming Data:
Tuesday, 9th July 2019
11:00 USD NFIB Small Business Optimism Index
13:30 CAD Building Permits
23:45 NZD Food Price Index
Philip McHugh

Philip McHugh

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)

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