The Australian Dollar made some small gains in the offshore session on Friday.
Imre Speizer, Westpac’s senior market strategist explained that “appetite for riskier assets like the Australian Dollar and equities improved for the second consecutive day during the offshore session on Friday”.
Friday evening saw the Preliminary release of the University of Michigan Consumer Sentiment for October, which is survey of approximately 500 consumers to measure consumer spending and gives an indication of overall economic activity. The result came out at 86.4 which was slightly better than the forecast and relatively consistent with September’s figure of 84.6. The US also had the October release of New Building permits which provides the annualised number of new residential building permits issued for the previous month. The figure was an improvement on last month at 1.02 Million.
US Federal Official for St Louis, James Bullard, suggested last week that the bond purchasing program may need to continue beyond its scheduled end day. The expectation was to end the quantitative easing by the end of October however Bullard has stated that “Inflation expectations are dropping in the U.S. and that is something that a central bank cannot abide,” suggesting that “QE pause would possibly send the signal that we do want to keep inflation expectations stable.”
Further discussion on this possible change will likely impact the US Dollar and cause market volatility. Inflation data will be the focus this week for the US after these statements and the Core Consumer Price Index (CPI) data for the US is due to be released on Wednesday during the off shore session.
Locally today the markets will be affected by a speech from the Reserve Bank of Australia’s assistant governor Christopher Kent who is speaking at the Leading Age Services Australia National Congress in Adelaide.
The week ahead will continue to see Reserve Bank of Australia impacting the markets, with the Monetary Policy Meeting minutes available from tomorrow and Governor Glenn Stevens due to make a speech at the Annual General Meeting of the Australian Payments and Clearing Association in Sydney on Thursday. Investors will look for any indication of the RBA’s position on whether they consider the Australian Dollar is still over-valued and any possible discussion relating to future Interest Rate rises.