AUD Pushes Back UP

The Australian Dollar moved up overnight by approximately three quarters of a percent against the majors overnight, with exception being the NZD, as investors poured funds into the ‘Aussie’.

Overnight, the US announced their annualised Gross Domestic Product figure for the third quarter of 2014 and the forecast was that we would see a reduction from the previous figure of 4.6% to 3.0%. The result was better than expected, with a result of 3.5%. The Greenback saw over a full percent gain against the AUD on Wednesday night due to the hawkish stance on interest rates from the Federal Reserve and has since given back most of this ground despite a positive GDP reading.

The major releases influencing the value of the Euro last night came out of the Germany. The first release was in the form of the German Unemployment Rate and Unemployment Change, with the economy targeting no change to the official Unemployment Rate, with a mild 4,000 additional citizens being added to the Unemployment Change. The result was as expected with the Unemployment Rate remaining stable. Investors and economists’ focus remained on Germany following the release of their employment indicators as they reported on their current inflation levels. The forecast was for a minor increase to the annualised German CPI figure, from 0.8% to 0.9%. The printed figure was no increase to the German inflation rate which remains at 0.8% and was a key reason in the AUD pushing up to a 3 week high against the EUR.

As the largest economy in the Euro-Zone, the German CPI figure is an important gauge in determining the Euro-Zone inflation rate to be released this evening. With little change to the German CPI, economists’ anticipate no change to the previous Euro-Zone Core CPI figure of 0.8%, indicating that the Euro-Zone is still experiencing low inflation.

Australian economic releases out today will be concerned with the percentage change to Private Sector Credit and the Producer Price Index. The next major economic release of the Australian economy will occur on Melbourne Cup day next Tuesday when the Reserve Bank of Australia Rate Decision is announced. Once again, interest rates are expected to remain on hold at 2.5%, with the accompanying notes likely to be more significant in swaying the value of the ‘Aussie’.

Late week movement to the Canadian Dollar may occur following the release of the Canadian GDP this evening. The forecast is a minor contraction to 2.3% from the current 2.5% GDP annualised figure, which could provide the opportunity for the AUD to push closer towards parity against the ‘Loonie’ prior to the weekend.

Terry Finn