Positive US Consumer Confidence Survey Sends GBP USD Rate Higher, Renews Support For AUD & NZD

Modified: Tuesday, 25 September 2012 15:13 BST - Written by Ben Hughes

STORY LINK Positive US Consumer Confidence Survey Sends GBP USD Rate Higher, Renews Support For AUD & NZD

Strong Canadian Retail Sales numbers for July and a decent showing for the latest Case-Schiller Composite Index in the US during the early part of this afternoon’s session, set the stage for today’s main course – the release of September’s Consumer Confidence survey in the US.

The strong Canadian shop sales data helped the under-pressure Canadian Dollar pull back from its near-term low of 1.5920 against the Pound, which it broke to this morning. Fears persist that the slow-motion car crash which the global economy appears to be going through will adversely affect global demand for Canada’s major export – crude oil. However, today’s encouraging retail sales numbers may serve to re-ignite rumours that the Bank of Canada is set to commence a new cycle of interest rate rises sooner rather than later.

September’s US Consumer Confidence survey was met with euphoria by equities and currency traders alike – expectations were that the key figure would should a healthy improvement on August’s 60.6 print to show at 63.1. However, the actual figure showed at a massive 70.3, signalling a hugely positive response from US economic participants to the Federal Reserve’s QE3 plans, which were revealed earlier this month. Perhaps Quantitative Easing is indeed the universal panacea which it is cracked up to be...

The market’s instant response to the US release was a renewed bout of US Dollar-selling, sending the GBP USD exchange rate upwards above 1.6250 once again. Successive closes above last Friday’s 13-month high of 1.6310 would send out a strongly bullish signal for Cable.

As always, every coin has at least two sides in the global currency markets. The positive news from the world’s largest economy is likely to trigger renewed upside pressure on the high-yielding Australian and New Zealand Dollars. This could see the GBP AUD and GBP NZD exchange rates dip below 1.5500 and 1.9600 respectively in the near-term.

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