US Economic data holds steady, on new highs.
Last night was a much anticipated night for the US economy. The Advance Gross Domestic Product (GDP) figure from the USA was expected to be vastly better than the previous quarter release of -0.2. The figure was slightly under the expectations of 2.6%, however, still very strong at 2.3%. The Advance GDP is the first of three GDP releases for the USA. As it is the first release, it tends to have the largest effect on the AUD/USD exchange rate. Overall, the AUD was 0.4% higher after the data was released to the market.
Unemployment Claims from the US came in slightly better than expectations, the final figure being 267K claims versus the expected 278K claims. The market did not react significantly to this release. However, compared to 12 months ago, the figure was producing 300K+ claims per month, whereas now all of the recent releases sit comfortable below the 300K mark. This shows investors that the US employment conditions have immensely improved and are stabilizing.
Business Confidence may return in New Zealand
Since Reserve Bank of New Zealand Governor, Graeme Wheeler, raised the interest rate to 3.5%, 5 months ago. It has led to the NZ business confidence being obliterated from extremely high index figures of 30+, to last month’s figure landing in the negatives. However, Governor Wheeler has now cut rates back to square one (-0.5%), on 3% again. Given the recent monetary loosening, we should see this figure actually improve, by quite a bit, the figure is a lagging indicator, and therefore it may take another month to see the interest rate cut externalities flow through.
Australian Consumer inflation
The Australian Producer Price Index (PPI) is due out today, and it is expected to be worse than the previous figure. The PPI figure is a leading indicator of consumer inflation levels; therefore it is a key release on investors watch list. PPI is currently sitting at 0.5% Quarter on Quarter, expected to fall to 0.2%. This should bring the AUD weaker at 11.30am AEST today, however this will depend on the actual figures, and how the market interprets them.