Sterling Rallies on Stronger Conservative Polling
Despite yesterday’s worse-than-expected service sector PMI release the Pound exchange rate managed to claw its way back up against most of the major currencies due to polling showing an 11-point lead for Conservative leader Theresa May.
The service sector PMI, usually very influential on the pound, took a back seat to election hysteria as the ICM poll demonstrated a far more significant lead for the Conservatives than previously thought. Any promise of a Conservative majority (and thus a stronger hand in Theresa May’s Brexit negotiations) is going to drive the Pound higher.
Wednesday will see the release of May’s RICS House Price Balance – a gauge for the costs of homes in the United Kingdom. Friday has a significant number of releases, but due to the importance of the general election it is unlikely that these will have much effect. Traders wait with baited breath for Thursday’s results.
Euro Holds its Breath for the UK Election
The Pound is currently rebounding from previous two-and-a-half-month lows against the Euro, primarily due to aforementioned election polls.
The Euro itself has seen some positive service sector releases but, despite this, the Euro continues to trade within a relatively small band against most major currencies – barring the New Zealand Dollar and the Japanese Yen which it has lost significant ground against.
Trading patterns for the Euro this week will likely be dictated by the UK’s general election, and all sentiment regarding.
Cable Reaches One Week High
‘Cable’ hit a one-week-high as of yesterday as questions of a hung parliament in the UK receded.
The US ISM Services/Non-Manufacturing Composite came in at 56.9, worse than the forecast of 57.1, but the US Dollar seemed somewhat unperturbed, continuing to trade against most major currencies with very small fluctuations today.
Tomorrow’s USD Consumer Credit report will be somewhat useful, as it will give some insight into how interest rates have manifested for the consumer and therefore how future spending could be affected. Thursday will see the release of data on Initial Jobless Claims – the number of people filing for unemployment benefits for the first time – with a decrease in numbers forecast, it could spell small positive changes for the US Dollar.
Geopolitical Insecurities Push the Canadian Dollar Down
Canada’s oil tribulations saw the GBP/CAD reach a one week high yesterday, with tanking oil prices spelling bad things for the Canadian Dollar amid fears that increased development in the Middle East would hurt the OPEC production cut extension.
Yesterday’s announcement of Saudi Arabia cutting ties with Qatar proved somewhat controversial; initially sending the prices of crude oil higher before they dropped by -1%. Qatar, despite being one of the smaller producers of crude (some 620,000 barrels a day), produces a significant amount of liquefied natural gas (LNG), so any instabilities within the region could have global energy implications.
Housing Starts data is released tomorrow, which essentially reflects the rate of growth for housing construction – a useful indicator for assessing the strength of the Canadian housing market and indeed the economy as a whole. A significant decrease is forecast, which could spell good things for the GBP/CAD.
Australian Dollar Strengthens on the Back of Positive PMI Data
The Pound to Australian Dollar exchange rates fell yesterday on the back of Chinese PMI data growing stronger. The positive manufacturing index also played a hand, showing an increase to 51.2, from 51.5, whilst their service sector PMI climbed from 51.5 to 52.8.
The big data for today is the Australian Reserve Bank’s rate decision coming in as forecast at 1.50% – the same as previous. With no change, the effects on the AUD trading against most major currencies are somewhat insignificant.
New Zealand Dollar Reaches Highest Level in Three Months
The ‘Kiwi’ reached a three month high yesterday, with the trade-weighted index rising to 76.94; growth of which can be attributed predominantly to the negative US Services and Manufacturing Composite release.
Despite this, however, Sterling did gain some ground against the New Zealand Dollar – with most gains a result of the Conservatives lead in the UK political polls.
Keep an eye out for today’s New Zealand dairy auction – dairy products being their most lucrative export. Any price fluctuations we might see today will, in turn, have wider effects on the ‘Kiwi’ Dollar.
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