The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
GBP/EUR is weakening again this morning, having fallen -0.3% to €1.0884, while GBP/USD is stuck at opening levels of US$1.2942. GBP/AUD has advanced to AU$1.6277, GBP/NZD has weakened to NZ$1.8071 and GBP/CAD has edged up to C$1.6066.
The UK construction PMI is set for release today. Read on to find out why traders are unlikely to pay it much attention…
What’s been happening?
An unexpectedly strong UK manufacturing PMI for August helped to boost the pound on Friday, although it was US data in the afternoon that caused the bulk of gains.
The manufacturing index had been expected to weaken to 55, but instead climbed from 55.3 to 56.9, helping go some way towards dispelling the gloom surrounding the economic outlook for the third quarter.
The day’s Eurozone data was largely uninspiring, given that it was mostly finalised confirmation of existing estimates for manufacturing and GDP growth for various members of the currency bloc. Traders were wary of buying into the euro, given that the common currency is still particularly strong and there are concerns the European Central Bank (ECB) may claim it needs to fall in order to boost inflation and trade.
The US non-farm payrolls report significantly disappointed, recording job creation of 156,000 compared to estimates of 180,000. Additionally, July’s bumper growth was revised down to a much-less impressive 189,000, meaning the unemployment rate rose to 4.4%. Wage growth was also sluggish.
Altogether this allowed GBP/EUR and GBP/USD to record some respectable gains before the weekend.
What’s coming up?
The UK’s construction PMI this morning is unlikely to cause much volatility, given that it covers only a small portion of the nation’s economic output.
The Eurozone Sentix investor confidence index is expected to weaken slightly, which could dent the euro, while Eurozone consumer price figures are expected to have shown mild growth of 0.1% on the month, with year-on-year growth edging lower. This is unlikely to particularly impact EUR.
There is no US data set for release, leaving USD to drift on Federal Reserve interest rate hike bets.
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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)