Australian Dollar
The Australian Dollar was on strong form yesterday, although the ‘Aussie’ could do no more than hold opening levels versus the Chinese Yuan and the US Dollar. Strong consumer sentiment helped to buoy the Australian Dollar, with the Westpac confidence index rising for the third consecutive month in October. A 1.1% rise took the index up to 102.4; a 4.7% year-on-year increase as Australians reported an improved outlook for the domestic economy. Credit card purchase and balance data remained level as well, although the previous month’s purchase volume was cut lower to UA$23.5 billion.
With the Reserve Bank of Australia’s (RBA) latest meeting minutes refusing to rule out further easing, a strong consumer inflation expectation figure today could help boost the Australian Dollar on lower stimulus bets.
Sterling
AUD/GBP exchange rates seesawed yesterday, but ended the session making gains thanks to further Brexit speculation. Pound Sterling was initially buoyed by the fact that Prime Minister Theresa May had apparently reversed her position on letting MPs debate the Brexit thanks to overwhelming pressure from Labour and backbench Conservatives. However, during the latest Prime Minister’s questions May refused to address whether or not Parliament would be afforded a vote on the government’s Brexit plans once they have been developed. This soured investor sentiment again.
The RICS house price balance for September is predicted to advance from 12% to 14% today; a positive sign, although the markets are unlikely to notice it given the latest developments in Parliament regarding how involved MPs will be in the negotiation process.
Euro
Eurozone industrial production data may have surprised forecasts to the upside, but the Euro was largely weak yesterday following comments made on Tuesday by European Central Bank official Yves Mersch. The Executive Board member claimed that Eurozone growth was dependent upon the ECB’s loose monetary policy. This suggested that the Governing Council would not be able to reign in stimulus measures without the Eurozone suffering. Markets are likely re-evaluating the recent rumours that the ECB plans to taper its QE programme; given that Mersch thinks strong stimulus is still required, if the asset purchase rate was to be slowed it would likely suggest either the programme is not working, has reached the limits of its effectiveness, or is unsustainable, rather than the more positive reason that it has achieved its aim and is no longer needed.
While today’s German consumer price index is simply the finalised version of earlier estimates, the Euro could receive a boost if the data surprises to the upside.
US Dollar
The US Dollar advanced yesterday, boosted by strong bets of a Fed rate hike in December, aided by comments from the Fed’s William Dudley. While Dudley actually suggested that stimulus could remain in place for longer, as the excess capacity in the economy enabled the Fed to be ‘gentle’ with the tightening of monetary policy, his outlook on the economy was positive. He claimed that the current economic expansion could be ‘very long-lived’ assuming a ‘moderate rate of growth over the next five to 10 years’, helping to cool lingering fears of a US slowdown or recession that still dog the US Dollar.
Initial and continuing jobless claims for the previous week are set for release today. Initial claims are expected to have edged higher from 249k to 253k.
Canadian Dollar
The Canadian Dollar was weak yesterday, with a strong US Dollar pressing down on the oil markets and threatening to send WTI back below US$50 per barrel. News that activists had bypassed security fences and manually shut down pipelines carrying crude from the Canadian oil sands to the United States caused some market consternation – more on the idea that security could be so easily compromised than on the negligible impact upon supply. Also, after months of fretting over the global oil oversupply – and before a cartel agreement to cut production has been confirmed – investors have begun to worry about the prospect of a market crunch next year once the, as yet non-existent, production freeze works to curb the current glut.
Canada’s new housing price index for August is set for release today.
New Zealand Dollar
The New Zealand Dollar was on mixed form yesterday, registering mild gains versus the Canadian Dollar, the Euro and Pound Sterling. The fact that the ‘Kiwi’ ceded ground to its other peers revealed that there was no real momentum behind the currency’s mixed performance, indicating the markets were still concerned by the likelihood of imminent policy easing from the Reserve Bank of New Zealand (RBNZ).
There is plenty of New Zealand data on the calendar today, including the Business New Zealand performance of manufacturing index for September.
Data Released
October 13th 08.30 NZD Business NZ Performance of Manufacturing Index (SEP)
October 13th 10.01 GBP RICS House Price Balance (SEP) 14%
October 13th 11.00 AUD Consumer Inflation Expectation (OCT)
October 13th 17.00 EUR German Consumer Price Index (YoY) (SEP F) 0.7%
October 13th 23.30 CAD New Housing Price Index (YoY) (AUG)
October 13th 23.30 USD Initial Jobless Claims (OCT 8) 253k