The AUD has improved against all the majors over night, improving over 0.30% against both the USD and GBP, 0.26% against the EUR.
There could still be some confidence in the AUD despite the Reserve Bank of Australia’s Governor Glenn Stevens talking down the Australian dollar last Thursday, describing it as “overvalued” and “not by a few cents”. There was no significant data out of Australia over the past two days and a relatively quiet day on Friday with the 4th July currency Holiday. The improvement can be partially be attributed to the NAB business reports, conditions which came in at 2, no forecasted expectation however the previous month was at -1 and confidence at 8 previous period was 7.
Contributing to the improvement in the AUD against its partners was discouraging industrial data out of both the Euro-zone and the UK. Low level data out of Germany included Imports -3.4% against 0.5% forecast, Current account balance 13.2B against forecast of 14.5B & Exports -1.1% against forecast of 0.4%. German Trade balance was still a positive result at 18.8B with a forecast of 16.2B.
UK Industrial data out over night which also resulted in some less than expected results, industrial production 2.3% against 3.2% forecast and a lower figure than the previous result of 2.9%; indication of industry slowing. Industrial Production is a significant short term data measure of output and provides somewhat of a precursor to GDP figures due to the large portion of GDP made up by industry.
More significant data for the week starts today out of China with both the Consumer Price Index and Producer Price Index figures. Data out of China, who is both Australia and New Zealand’s largest trading partner, is likely to have ramifications on the two currencies.
Australia employment data out Thursday includes the Employment Change providing indication of job creation changes and the unemployment rate release both of which will give us insight into future consumer spending and overall economy.
The GBP Bank of England rate decision out Thursday night is likely to watched with keen interest. Whilst forecasted to remain at the current rate of 0.50%, any discussion of possible rate increase for the remaining period of the year is likely to give the GBP a boost as it as with previous comments.