sign up log in
Want to go ad-free? Find out how, here.

UK PMI hit by post-Brexit sentiment; Eurozone PMI remains in expansionary cycle; G-20 acknowledges global economic headwinds; NZD/USD worst performer last week

Currencies
UK PMI hit by post-Brexit sentiment; Eurozone PMI remains in expansionary cycle; G-20 acknowledges global economic headwinds; NZD/USD worst performer last week

By Kymberly Martin

European currencies declined against a stronger USD on Friday. The NZD/USD managed to hold its own.

On Friday night, broad measures of risk appetite were fairly solid and equities made modest gains, led by non-cyclical sectors. The GBP was the first currency to make a bold move. It fell vertically after the release of preliminary UK PMI readings for July.

These captured post-‘Brexit’ sentiment. Both the manufacturing and services readings were below 50 i.e. in contraction territory. But the services reading, at 47.4, was the most disappointing. From close to 1.3290 the GBP/USD promptly found itself below 1.3200. It subsequently consolidated around 1.3100.

By contrast, overall Eurozone PMI readings remained in expansion territory, with French and German components coming in above expectation. The EUR/USD was fairly stable on Friday evening, but broke through technical support at the 1.100 level early on Saturday morning. It closed for the week at 1.0980.

Over the weekend the G-20 met. A draft communique seen by Bloomberg News, stated; "Members of the G-20 are well positioned to proactively address the potential economic and financial consequences stemming from the U.K. referendum". Adding that; "The global economic environment is challenging and downside risks persist, highlighted by fluctuating commodity prices, low inflation in many economies, geopolitical conflicts, terrorism and refugee flows." IMF head, Lagarde also acknowledged recent signs of voter disillusionment in the West, saying; “There was a consensus around the table that more needs to be done to share the benefits of growth and economic openness broadly within and among countries.”

On Friday night, the NZD was able to hold its own against a stronger USD. However, this did not prevent the NZD/USD scoring the title of worst performer for the week. The NZD/USD ended the week just below 0.7000.

There were some notable moves on the crosses on Friday. The NZD strengthened against the AUD and its European peers. From early Friday afternoon lows near 0.9320 the NZD/AUD ended the week at 0.9380.

It looks to be a relatively quiet start to the week, with little scheduled on the local calendar (aside from a non-public speech from RBNZ’s Wheeler).

Looking ahead, Australia's Q2 CPI release on Wednesday will be crucial for RBA rate cut expectations and the AUD, ahead of the RBA’s meeting next week.

Meanwhile the US FOMC meeting on Wednesday and BoJ on Friday will be important for direction of the USD this week.

Get our daily currency email by signing up here:

Email:  

Daily exchange rates

Select chart tabs

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
End of day UTC
Source: CoinDesk

BNZ Markets research is available here.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

1 Comments

A bit alarmist, dare I say.
A fifteen minute candle, earlier today, accounts for over 60% of the drop in GPB/USD.
Although that drop was vertical!

Up
0