Australia
Australia has a new Prime Minister in Scott Morrison. He has won the vote 45-40 to lead the Liberal Party which automatically puts him in the top job. The New Treasurer is Josh Frydenburg who has inherited the job from the outgoing new PM Scott Morrison. The Australian Dollar has had a rocky week starting with political uncertainties then worse than expected Building Approvals and Private Capital Expenditure all impacting on price. Building Approvals printed down at -5.2% after markets were expecting -2.2% along with quarterly Capital Expenditure down at -2.5% from 0.6%, sending the Aussie Dollar weaker across the board. Against the US Dollar the struggling currency reaching a low of 0.7270 post releases.
New Zealand
Our delightful Prime Minister tried her hand at persuading the business community midweek that business confidence was not that bad, siding with Westpac on the issue to reassure a rosy future and greener pastures and not to blame the current government. Certainly, the New Zealand Dollar has been a solid representation of confidence sliding a long way from pre-labour highs. The facts were evident yesterday, ANZ Business confidence published significantly lower than the -44.9 predicted to -50.3, bringing sellers of kiwi to the markets in droves. Dropping a further 5 points from previous figures this corresponds to a general consensus that business conditions over the next few months will deteriorate more. GDP growth figures to be released over the next few weeks should also show a softening outlook. The New Zealand Dollar fall 50 points to 0.6650 against the US Dollar post the announcement.
United States
A light economic docket this week has panned out for the US Dollar with very little to be excited about. Quarterly GDP printed better than the expected 4.0% to 4.2% for the second quarter of 2018. The general picture of slow rising economic growth remains the same. Starting the week was news centered on the potential new trade agreement between Mexico and the US. This breakthrough on trade with Mexico captured investor attention in the midst of yet another failure for U.S. and China trade talks. President Trump says he is optimistic around Canada joining a trade deal with Mexico which will essentially replace the NAFTA. Canada have stated the wish to be part of the deal, Canada’s foreign minister saying trade negotiations with the US are at a very tense stage. An agreement should be agreed this week with both parties having a lot to get through in a short period of time. Risk sentiment will be the main key currency driver for the rest of the week, we expect further volatility to eventuate.
United Kingdom
What a difference a day makes. After commenting on Brexit’s uncertainties and lack of clarity from either party, new headlines developed Wednesday to suggest otherwise. Brexit’s chief negotiator Michel Barnier said Europe was prepared to offer the UK an unprecedented extremely close relationship after it quits the EU. He would not permit any arrangement that would weaken the single market. Talks will continue with both sides looking serious about cementing a deal ahead of the UK summit in mid-October but reports are suggesting any such deal will more than likely be delayed until November. Optimism ran high with markets reacting positively, the GBP surging higher against all its counterparts including a hefty spike to 1.3030 a four week high, where it has consolidated. With absolutely nothing on the economic docket for the rest of the week we should see the GBP take a breather pending any further surprise news items.
Europe
The Euro (EUR) has been fairly steady over the week riding off the British Pound fortunes. It has been one of the strongest performers along with the Pound. A Rise in German IFO business confidence the first in 9 months kept the EUR on a positive footing. Over the last 24 hours the Euro has eased slightly as risk averse sentiment sneaked back into play after markets got nervous around the current trade deal being negotiated between the US and Canada. The deadline for this is today with markets speculating it will drag on. German Retail Sales and CPI Flash yearly estimate publish tonight. Retail Sales is expected to release lower than consensus after last month’s figures printed at 1.2% putting pressure on the Euro. With the long term bullish channel still in place form the low of 1.1310 mid-August we may see this broken to the downside with it retracing back through 1.1600. Next week sees no economic data to release in the Eurozone.
Japan
The Japanese Yen continued its slump over the week across the board as markets focused on risk associated products. With fresh optimism in the air around the US and Mexico trade deal this has buoyed support for the US Dollar. US Prelim quarterly GDP printed at 4.2% from the 4.0% expected sending the Japanese Yen further in the red to 111.80 against the greenback. Thursday has seen a change of heart with market anxiety growing with speculation a trade deal between the US and Canada may not be negotiated by Friday’s deadline. Equity and risk products all took a dive, particularly the Japanese Yen is stronger as buyers of the safe haven came back to the table. Against the US Dollar the Yen retraced all the way back to 111.00 Friday. Japanese Retail Sales came in slightly weaker at 0.1% from the 0.2% expected with prior figures representing 1.5% growth putting added pressure on the Yen.
Canada
The Canadian Dollar continued to trade higher across the board as speculation a trade deal between the US was close. With talks currently still ongoing negotiations look like they may come down to the wire with the US vying for a result by Friday. Canada’s top trade negotiator said he was “encouraged” by the urgent discussions to revamp the old North American Free Trade Agreement (NAFTA) saying the atmosphere was constructive. Equities and risk products turned into negative territory overnight with as anxiety starts to creep into markets, demand for safe haven currencies has increased. The Canadian Dollar has also given back gains after the Current Account and monthly GDP both printed slightly down on expectations. Against the US Dollar current levels are around the 1.2980 mark with it coming from 1.2900 Thursday.