Australian Dollar
The Australian Dollar was boosted yesterday by rising commodity prices and positive domestic data. Iron ore closed the session higher for the sixth consecutive day, helped by a lacklustre US Dollar. The domestic TD Securities inflation report showed that, although CPI growth edged down to 0.2% from 0.4% on the month, year-on-year growth rose from 1.3% to 1.5%. Australia’s consumer price index is only released by the Australian Bureau of Statistics (ABS) every quarter, but TD Securities aims to replicate their methodology to provide a monthly report. Strengthening annualised inflation figures will help lessen market expectations of a return to policy easing from the Reserve Bank of Australia (RBA).
The RBA announces its latest monetary policy decision today. A rate freeze at 1.5% is expected.
Sterling
The markets were largely uninterested by the UK’s latest data, with the AUD/GBP exchange rate advance being driven instead by speculation over the future of Bank of England (BoE) Governor Mark Carney. Recent attacks on the Governor and his monetary policy stance from Conservatives including Theresa May and Michael Gove had caused the markets to postulate that Carney may decide to leave the bank before his term expires.
The latest manufacturing PMI is expected to weaken by -0.9%, although markets may not pay much attention given the approach of the Bank of England’s latest ‘Super Thursday’ trio of announcements this week.
Euro
The Euro was kept soft yesterday by the latest economic data from the currency bloc, even though the headline Eurozone CPI and GDP figures printed positively. Eurozone CPI for October rose to 0.5%, while core prices continued to grow at the 0.8% pace seen during the previous month. GDP remained at 0.3% on the quarter, while the economy expanded 1.6% on the year, again keeping pace with the previous reading. But German retail sales and Italian inflation data significantly disappointed, taking the shine off the day’s key releases. Retail sales in Germany fell by -1.4% on the month; a 0.2% rise after last August’s predicted -0.4% drop. Meanwhile, Italy surprised with -0.1% deflation year-on-year.
There is no Eurozone data on the calendar today.
US Dollar
The US Dollar was recovering yesterday, its status as a safe-haven asset helping it remain strong despite the last election news unsettling the stock markets. The FBI announced over the weekend that it was reopening an investigation into Hillary Clinton’s use of a private email server during her time as Secretary of State, which potentially compromised national security. This saw the Democratic candidate’s lead in the polls over Republican Donald Trump collapse, bringing the two rivals virtually neck-and-neck. The fact that the market odds of an interest rate hike from the Federal Reserve in December remained over 75%, couple with no downside surprises from the day’s minor data, helped keep demand for the ‘Greenback’ strong.
There is no US data schedule for release during the Australasian session, but the key ISM manufacturing index will be released early tomorrow morning.
Canadian Dollar
The Canadian Dollar was mixed yesterday, despite the signing of the Comprehensive Economic and Trade Agreement (CETA) with the EU. The deal had nearly collapsed last week after regional Belgian authorities vetoed the country’s approval, but quick work by EU figureheads managed to provide the necessary assurances for all areas of Belgium’s government to give approval. Canadian Prime Minister Justin Trudeau attended a summit in Brussels to sign the deal. However, other events over the weekend were ensuring the Canadian Dollar remained largely on the downtrend. The latest OPEC meeting saw the Organisation of the Petroleum Exporting Countries fail to agree anything concrete, raising the pressure on the November meeting to produce a deal to cut oil production.
Canada’s latest gross domestic product figures are expected to show that economic expansion slowed on the month but advanced at a steady pace on the year.
New Zealand Dollar
Disappointing ecostats weakened the New Zealand Dollar yesterday, with the ‘Kiwi’ largely in negative territory against its peers. While the number of building permits issued in September did grow after contracting the previous month, August’s rate of decline was revised even higher to -1.5%. Meanwhile, the ANZ activity outlook and business confidence indices both weakened noticeably. The M3 money supply slowed by -0.5%, indicating that there was less money in circulation in the economy, which could stifle inflationary pressures.
The latest Global Dairy Trade auction results will be announced later today. A rise in milk prices will likely send the New Zealand Dollar higher.
Data Released
November 1st NZD Dairy Auction Avg. Winning Price MT (NOV 1)
November 1st 14.30 AUD Reserve Bank of Australia Rate Decision (NOV 1) 1.5%
November 1st 20.30 GBP Markit UK PMI Manufacturing SA (OCT) 54.5
November 1st 23.30 CAD Gross Domestic Product (YoY) (AUG) 1.3%
November 2nd 01.00 USD ISM Manufacturing (OCT) 51.7