Australian Dollar
Strong domestic and Chinese data wasn’t enough to keep the Australian Dollar from slumping into negative territory yesterday. Consumer confidence rose nearly four points, while the NAB business confidence index advanced from 4 to 6. The Reserve Bank of Australia’s (RBA) Chris Kent offered an upbeat assessment of the Australian economy, while Chinese industrial production and retail sales figures for August showed stronger-than-expected growth. However, with bets of monetary tightening from the Fed still strong for December, the US Dollar was continuing its recovery, dampening appetite for the commodity currencies.
As well as the Westpac consumer confidence survey results for September, two further RBA officials – Richards and Debelle – are due to speak today.
Sterling
UK inflation data for August disappointed yesterday and so the Australian Dollar was able to make bullish gains versus Pound Sterling. The rate of consumer price growth remained steady in both the core and non-core measures, despite forecasts of a ten basis point acceleration in both indices. Economists had expected the impact of the weaker Pound to push up prices, but the data did not reassure markets that an inflation spike was not on the way. Weaker inflation also lowered the odds that the Bank of England (BoE) would be able to tighten monetary policy again soon.
While today’s labour market data is expected to show little change on the month, wage growth is predicted to have slowed, which could weigh on Pound Sterling.
Euro
Recent market speculation that the European Central Bank (ECB) may be considering scaling back QE continued to boost the Euro yesterday. This was despite the fact that the day’s data had been far from supportive. Finalised German consumer prices confirmed that there had been no change in inflation on the month in August, while year-on-year prices had climbed just 0.4%. Later, the ZEW surveys largely disappointed forecasts, with the German current situation index falling further-than-expected from 57.6 to 55.1, while economic sentiment in the Eurozone only rose to 5.4 instead of 6.7.
Eurozone industrial production figures for July are due for release today. An increase from 0.6% to 1% is predicted on the month, while an annual decline of -0.8% is forecast.
US Dollar
Neel Kashkari and Lael Brainard may have been dovish on the necessity of an interest rate hike in the near-term, but the US Dollar quickly recovered initial losses yesterday. The odds of a September hike have fallen to just 15%, but bets of tightening in December suggest a 54.5% likelihood of tightening, keeping the ‘Greenback’ buoyant. The Federal Reserve has now entered its ‘purdah’ period ahead of the next interest rate decision, meaning there will be no more communication on potential policy changes to create volatility in the US Dollar. The day’s only data, the NFIB small business optimism index, saw a mild decline from 94.6 to 94.4. A creep up to 94.8 had been predicted, but the report had little effect on hike bets.
MBA mortgage applications data is the only key report on the US data calendar today; the calm before the storm of tomorrow’s data slew, which kicks off with the hotly anticipated advance retail sales figures.
Canadian Dollar
The Canadian Dollar fell against all its regularly-traded peers bar Pound Sterling yesterday. The twin factors of a strengthening US Dollar and a new pessimistic oil supply forecast for 2017 softened the ‘Loonie’. The International Energy Agency (IEA) pointed to a sharp slowing in demand for oil, as well as strong inventories and continued high supply, stating that as a result the oil markets would remain oversupplied until at least the middle of 2017. Brent Crude fell more than -1.2%, while WTI Crude weakened over -1.8%.
A lecture from the Bank of Canada’s Carolyn Wilkins is the most high-profile event on the Canadian data calendar today.
New Zealand Dollar
The New Zealand Dollar was largely weak yesterday, despite a supportive rise in food prices. Accounting for almost a fifth of the consumer price index, food prices posted the biggest monthly advance in three years, growing 1.3% after July’s -0.2% drop. This suggested that inflationary pressures are building in New Zealand, which could lessen the need for the Reserve Bank of New Zealand (RBNZ) to increase stimulus measures in order to boost price growth. A 3% rise in cheese prices, after three consecutive months of declining prices, was good news for the domestic dairy industry, boosting the outlook for the New Zealand economy.
The only data from New Zealand today will be the second quarter current account and current account deficit to GDP ratio figures.
Data Released
September 14th 08.45 NZD Current Account Balance (2Q) -0.295b
September 14th 10.30 AUD Westpac Consumer Confidence (SEP)
September 14th 18.30 GBP Average Weekly Earnings (3M/YoY) (JUL) 2.1%
September 14th 19.00 EUR Eurozone Industrial Production w.d.a. (YoY) (JUL) -0.8%
September 14th 20.15 CAD Bank of Canada’s Wilkins Lecture in London UK
September 14th 21.00 USD MBA Mortgage Applications (SEP 9)