The AUD has experienced a retracement recently due to promising Chinese data and also an increased ‘risk on’ appetite in the global markets. The AUD is not expected to continue this way as indicated by the current market fundamentals; however, this may be the short term spike investors have waiting for.
Yesterday, the New Zealand economy released two key economic figures. The most highly anticipated was the Global Dairy Trade Index (GDT). The figure until recently was performing poorly, given that most recent figures, until the two most recent releases, have been significantly negative. The GDT has been on the increase for the last 3 rounds; due to the lagging effect of recent NZD depreciation. This has made New Zealand dairy goods prices much more competitive at a global level, allowing profit margins to be tweaked higher.
Along with this we had the Current Account balance which was expected to fall to the negative once again after just making it into positive territory the month before. Analysts were expecting a figure of -1.4 billion; the actual figure came in slightly better at -1.22 Billion for September, providing the NZD with some support.
Over to the UK, we found that the Average Wage Index came in above market expectations; the release came in at 2.9% from an expected 2.5%. This figure is a strong leading indicator of Consumer inflation. Considering the UK Consumer Price Index (CPI) came in at 0% on Tuesday night – this gives investors a little more confidence in next month’s CPI release.
Another positive out of the UK was the Unemployment rate that surprised the market, landing on 5.5%; whilst the market expected 5.6%. The GBP/AUD rate has found some solid support on the 2.15 exchange rate, again; however the market is currently testing these levels.