Australian Dollar
Consumer confidence edged higher in the latest Westpac report, but the Australian Dollar wallowed below opening levels versus the majority of its currency peers yesterday. The fact that upcoming New Zealand data is forecast to show strong GDP growth made the ‘Kiwi’ the high-yield asset of choice for investors, sapping demand for the ‘Aussie’. The building likelihood of US monetary policy tightening in December continued to weigh on the Australian Dollar as well.
Unemployment figures are due today. The rate of joblessness is not expected to have changed from the current 5.7%, although it is predicted that 15,000 new jobs will have been created in August.
Sterling
Despite disappointing UK jobless claims data, the Australian Dollar did not have the momentum to rack up gains against Pound Sterling, leaving AUD/GBP trending flat around opening levels. The Pound had initially spiked higher following the release of jobless claims data as the figures revealed the labour market had not taken a hit from the Brexit referendum. However, once the initial relief rally faded, AUD/GBP closed the gap to starting levels as investors examined the data. Particularly disappointing was the slowing rate of wage growth, which weakened from 2.3% to 2.1%. The fact the Bank of England (BoE) policy meeting was just a day away also weighed on the Pound.
The Bank of England will announce its latest monetary stimulus measures today. No changes are expected to either interest rates or quantitative easing, although the Monetary Policy Committee (MPC) could signal that more stimulus is likely before the end of the year.
Euro
Eurozone data was sparse and mixed, with industrial production in the currency bloc unexpectedly declining -1.1% on the month and seeing an above-forecast slowdown in decline on the year. The Euro remained mixed, but mostly in negative territory, throughout the day, helped lower by comments from the European Central Bank’s Klaas Knot. Although he assured markets the central bank could find the necessary instruments to stimulate growth, he warned that the central bank risked diminishing returns if it continued to provide monetary stimulus, suggesting concerns over the effectiveness of current ECB policy.
Eurozone trade balance data for July and consumer price figures for August will be released today. Although the figures are finalised versions of earlier estimates, with no change expected, markets may still react dovishly thanks to the reminder that inflation remains painfully low in the Eurozone. This is a particularly pertinent point considering markets are currently acting as though the European Central Bank (ECB) plans to cut stimulus measures after Mario Draghi admitted the Governing Council had not discussed quantitative easing during the last meeting, even though markets expected tweaks to the programme. Weak inflation will serve as a reminder
US Dollar
Some investors were selling the US Dollar yesterday after the appreciation earlier in the week, softening the ‘Greenback’. With key US data just around the corner, investors were unwilling to buy into the US Dollar until the latest economic data had been made available. Also weighing on the ‘Buck’ was a report from Oxford Economics that suggested if Donald Trump became President and was able to enact his policies the US economy would be -5% (-US$1 trillion) worse off in five years’ time. Bets of monetary tightening from the Federal Reserve in December also weakened, with the probability that rates would be held edging back up to 48.2% – around 4% higher than earlier in the day.
US advance retail sales figures will be published today. A small uptick in sales volumes is expected after the previous month saw stagnation. Also out are unemployment claims figures and industrial and manufacturing production statistics, amongst other reports.
Canadian Dollar
Oil prices were once again on the decline, with investors fearing the latest US crude oil inventories data. WTI was below US$45 per barrel, while Brent had fallen below US$47, after both indices lost over -1%. Continued expectations that overproduction and weakening global demand would keep prices lower remained a dragging factor on the Canadian Dollar.
The Canadian data docket is empty today.
New Zealand Dollar
Confidence that the upcoming GDP figures would reveal a strong surge in the rate of economic expansion during the second quarter made the New Zealand Dollar an attractive buy yesterday. The upwards pressure from strong data was enough to counter the fact that global markets are considerably risk-averse at present, with the ‘Kiwi’ trending bullishly despite expectations of US monetary tightening keeping high-yield assets weak.
Should today’s New Zealand second quarter GDP show the bullish rise from 2.8% to 3.6% on the year as forecast the New Zealand Dollar is likely to surge upwards.
Data Released
September 15th 08.45 NZD Gross Domestic Product (YoY) (2Q) 3.6%
September 15th 11.30 AUD Employment Change (AUG) 15.0k
September 15th 19.00 EUR Eurozone Consumer Price Index (YoY) (AUG F) 0.2%
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%