Money Transfer Compared Currency update
Ahead of the release of data which is expected to confirm that the UK economy expanded in the second quarter of the year the Pound is little changed against the US Dollar and is holding close to its highest level since January against the Euro. The Office for National Statistics is expected to say that the UK economy expanded by 0.7%. There are no major UK data releases today so any movement for Sterling will be caused by international factors.
The ‘Greenback’ is holding its gains against its most traded peers as demand for safe havens remain higher in the wake of a decline of Asian and US stocks. Concerns over a possible closure of the US federal government due to a lack of funds is weighing heavily upon the market. The key piece of data for the US Dollar today is the latest new home sales report. The data is expected to show that the nation’s housing market is adjusting to a jump in costs.
The Euro is little changed against its peers and is holding close to a one-week low against the US Dollar and its weakest level in nine months against Sterling. The single currency remains under pressure after a European Central Bank official said that it was too soon for the Bank to lift its crisis measures. Consumer confidence came in slightly higher than had been forecast but did little to bolster the currency.
The ‘Aussie’ has weakened again as fresh uncertainty over whether the US Federal Reserve will choose to taper its monetary easing policy in October. Demand for safe havens increased as the markets grow jittery over the future direction of the USA’s monetary policy.
New Zealand Dollar
The ‘Kiwi’ has declined against the majority of its peers after data showed that the nation’s trade deficit widened unexpectedly and as its biggest exporting company revealed that its earnings had shrunk. The trade deficit widened to NZ$1.2 billion in August, the biggest shortfall in five years.
The Canadian Dollar fell against its US relation and softened against most of its peers due to the value of the country’s biggest export, crude oil, fell as tensions eased in the Middle East. Speculation that relations between the West and Iran are improving sent oil prices to six-week lows.
South African Rand
The Rand is slightly firmer against the US Dollar but could reverse its gains if US data released later in the session comes in stronger-than-expected. The speculation over whether the Federal Reserve will opt to taper its monetary easing programme is weighing upon the Rand. South Africa's weak widening current account and budget deficits make it vulnerable to a reduction in the Fed's stimulus measures.