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Today's currency update: Dollar fluctuates as Pound receives boost

Tuesday 4th August 2015

Pound Sterling
Yesterday’s slightly stronger-than-anticipated UK Manufacturing PMI initially gave the Pound a little boost, but the British currency later reversed gains against peers like the Euro and US Dollar. Although the UK construction sector only accounts for around 7% of total UK output, the upcoming purchasing managers index could give Sterling a lift in the hours ahead if it shows the improvement forecast. 
The Euro fluctuated over the course of the European session as the Athens stock market reopened following a five week closure. Greek shares immediately plummeted and closed out the day 16% lower. Some common currency support came in the form of a stronger than originally estimated Manufacturing PMI for the Eurozone. Ecostats for the currency bloc are in short supply today so global economic developments will be the main cause of Euro movement. 
US Dollar
Monday saw the US Dollar fluctuate in response to a mixed bag of US economic reports. The nation’s core Personal Consumption Expenditure measure came in at 1.3% in June, rather than the 1.2% expected, but the ISM Manufacturing gauge printed at 52.7, down from 53.5 the previous month. Additionally, Construction Spending increased by 0.1% on the month in June when a 0.6% advance had been forecast. If today’s US Factory Orders data also falls short of the mark, it may weigh on Federal Reserve interest rate hike expectations and drive the ‘Greenback’ lower. 
Australian Dollar
The Reserve Bank of Australia’s (RBA) decision to leave interest rates on hold at its latest gathering helped the ‘Aussie’ stage an impressive rally over the course of the South Pacific session. The GBP/AUD exchange rate shed over 1.4% while the USD/AUD pairing was down 1.5%. The ‘Aussie’s uptrend was also aided by better-than-expected domestic trade balance and retail sales figures. Retail sales were shown to have increased by 0.7% on the month in June, a marked improvement on the 0.4% gain projected. 
New Zealand Dollar
Tuesday saw the New Zealand Dollar trending in a broadly stronger position, despite the nation’s Commodity Price index dropping -11.2% in July. New Zealand’s QV House Prices figure printed at 10.1% on the year last month, up from June’s annual reading of 9.3%. However, the ‘Kiwi’s newfound strength could prove short lived if the upcoming GlobalDairyTrade auction shows another decline in the value of New Zealand’s key export. Domestic employment data will also be responsible for driving New Zealand Dollar movement during the local session. 
Canadian Dollar 
After the price of crude oil, Canada’s main commodity, fell below the $50 a barrel level yesterday, the Canadian Dollar dropped to a new six-year low against the Pound. However, the ‘Loonie’ recovered ground ahead of the publication of the RBC Manufacturing PMI for July. A reading above the 51.3 recorded in June would be Canadian Dollar supportive. 
South African Rand
China’s concerning manufacturing data and US interest rate hike speculation kept the South African Rand trending close to a 14-year low against the US Dollar despite an uptick in a domestic manufacturing gauge. However, another batch of below-forecast US data might reduce US rate hike expectations and give emerging-market currencies a boost. 
*This update is provided courtesy of leading currecny broker TorFX

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