Australian Dollar
Friday was the mirror opposite of Thursday, where both Chinese and Australian data had bettered forecasts, turning the Australian Dollar bullish. Friday saw the ‘Aussie’ tumble, the decline sparked by a greater-than-expected weakening in the Chinese consumer price index from 1.8% to 1.3%. A slip of just ten basis points had been forecast. Australian statistics also disappointed, with home loans falling -4.1% instead of -1.5% as predicted. The value of loans figure dropped -3.1% after the downwardly-revised 1.6% growth seen in June.
Thursday’s unemployment data is expected to show that the rate of joblessness held steady at 5.7% and that 15k new jobs were added in August.
Sterling
Investors chose to see the positive side of July’s UK trade balance figures on Friday, causing the Australian Dollar to Pound Sterling exchange rate to tumble. The month’s trade deficits did narrow, although by a lot less-than-expected, while the previous shortfalls were revised higher. However, a solid £800 million rise in exports helped keep the Australian Dollar on the downtrend, with markets hoping this was a strong sign that weaker Sterling was fuelling overseas demand for UK-produced goods.
Construction output also weathered the Brexit storm well, holding level on the month instead of declining -0.5% as expected and growing 1.5% on the year instead of crashing from -0.7% to -3.4%.
After the last meeting’s huge adjustments, the Bank of England (BoE) is expected to leave monetary policy on hold during Thursday’s Monetary Policy Committee (MPC) gathering.
Euro
The Euro rode Thursday’s bullishness into Friday’s session, where demand for the common currency held despite a number of uncertainties from the day’s news. Firstly, in what has become something of a tradition, German data disappointed, raising concerns regarding the health of the Eurozone’s powerhouse economy. Eurogroup ministers met to discuss the delivery of the final tranche of Greek bailout funding; the Hellenic nation has not yet implemented all the necessary reforms in exchange for the funding. Its creditors expressed confidence that Greece would get round to it before the deadline, while at the same time calling for Greek Prime Minister Alexis Tsipras to hurry up.
The Eurozone ZEW economic sentiment survey is set for release on Wednesday. The net balance of positive financial experts is predicted to have recovered from 4.6 to 6.7.
US Dollar
The US Dollar was bullish on Friday after the economic forecast delivered by Boston Federal Reserve President Eric Rosengren. The influential policymaker warned that interest rates have been low for too long and that extended loose monetary policy poses serious risks to the economy. Rosengren suggested that normalising monetary policy was necessary if the US economy wanted to remain at full employment, stating that there was a ‘reasonable case’ for continuing to pursue ‘a gradual normalization of monetary policy.’ Considering Rosengren was the fourth Fed official to suggest interest rates should be increased, the US Dollar climbed on drastically increased bets of interest rate hikes in September or December. Odds for a September hike are still 67% in favour of a policy hold, but that represents a significant single-day drop on the previous 82% likelihood of a rate freeze.
After the Federal Reserve put the prospect of a rate hike in 2016 firmly back on the table, will the coming week’s US data unnerve the markets again? Thursday’s advance retail sales figure is expected to show growth after last month’s stall, but if all recent US data had printed on forecast markets would be incredibly confident of a September hike by now.
Canadian Dollar
USD bullishness was pressuring the oil prices lower on Friday and the Canadian Dollar followed suit. WTI and Brent both posted declines of around -2.4% during the day’s trading. Canadian housing starts slipped further-than-expected and the unemployment figures for August were mixed. Unemployment crept up to 7% as predicted, but the number of jobs created was significantly higher-than-forecast. After last month’s -31.2k fall, employment was expected to climb higher by 14k but instead rose 26.2k. As this still left the labour market weaker than it had been before July’s decline, investors weren’t overly impressed with the recovery.
There is barely any Canadian data on this week’s calendar. Markets may be interested by the contents of a lecture due to be delivered on Wednesday by the Bank of Canada’s (BOC) Senior Deputy Governor Carolyn Wilkins.
New Zealand Dollar
Multiple headwinds battered the New Zealand Dollar lower on Friday. As well as the slowing in Chinese consumer price growth, domestic retail card spending fell unexpectedly, weakening -0.4% after the previous month’s growth was cut lower to 0.2%. US Dollar strength was also sapping risk-appetite, further undermining the ‘Kiwi’s position.
Second-quarter GDP figures for New Zealand are set for release on Thursday.
Data Released
September 13th 19.00 EUR Eurozone ZEW Survey (Economic Sentiment) (SEP) 6.7
September 14th 20.15 CAD Bank of Canada’s Wilkins Lecture in London UK
September 15th 08.45 NZD Gross Domestic Product (YoY) (2Q)
September 15th 11.30 AUD Unemployment Rate (AUG) 5.7%
September 15th 21.00 GBP Bank of England Rate Decision (SEP 15) 0.25%
September 15th 22.30 USD Advance Retail Sales (AUG) 0.2%