The Australian Dollar exchange was expected to experience a highly volatile day during local trading due to a number of High tier data releases.
After a Laborious 3 day long wait the results are in………. Did they disappoint like my Weetbix Slice I baked at the weekend??
We what we know so far, the Reserve Bank of New Zealand (RBNZ) did cut the Official Cash Rate (OCR) 25 basis points to 2.75% and implied one more 25 basis point rate cut later in the year as previously predicted, which resulted in the New Zealand Dollar (NZD) falling sharply against all majors, including the Australian Dollar. The AUD/NZD made it to a high of 1.1147 following the release.
Governor Graeme Wheeler in the accompanying statement noted that ‘there was plenty of room for the bank to cut its OCR deeply if a much sharper global economic downturn hit the New Zealand economy harder’.
In the release of the RBNZ’s September Monetary Policy Statement there were indications that a weaker global economy would force more rate cuts indicating the OCR could be as low as 2% over the coming year.
The El Nino weather pattern is additionally causing concern as summer is right around the corner and a drought will put further pressure on agricultural production and economic growth in NZ.
The Aussie dollar bounced well after the good news released for those out job hunting…. Aussies are still hiring!! The unemployment rate fell to 6.1% down from 6.3%. This release saw the Australian Dollar to US Dollar (AUD/USD) Exchange rate rally to a high of 0.7066. Economists were expecting 5k jobs added to the Australian labour market the markets were impressed with the August figures showing an additional 17.4k jobs added.
Concurrently China released its Consumer Price Index (CPI) data for August this came in at 2% year on year versus 1.8% expected. As China is Australia’s largest trading partner economic news out of China can have a spillover effect on the AUD but in this case all eyes were on the positive domestic data, the Chinese CPI had little impact on the AUD/USD pairing.
Other data waited upon was the Interest Rate Decision out from the Bank of England last night at 9pm AEST, the results were as expected, unchanged at 0.50%.
Today there is very minimal high tier data to be released. At 6.30pm AEST out of the UK the Bank of England (BOE) the GFK Attitudes to inflation results from August and tomorrow is the University of Michigan Confidence Survey.
Looking ahead to early next week no high tier data to be released on Monday, on Tuesday out of the UK we have the Consumer Price Index (CCI) and Core Consumer Price (CCP) figures out.
AUD/USD 8.30am AEST 0.7072
AUD/GBP 8.30am AEST 0.4585
AUDNZD 8.30am AEST 1.1214