Australian Dollar
Confidence of low volatility returned to financial markets yesterday after the FBI cleared Hillary Clinton again of any wrongdoing regarding her private email server. This sparked strong global risk appetite, as markets were sure enough of a Clinton victory to feel confident buying into higher-yielding assets. As a result, the Australian Dollar was on bullish form; the most attractive of the commodity Dollars thanks to the absence of strong headwinds. That being said, the AiG performance of construction index did slump back into contraction territory, dropping from 51.4 to 45.9.
With US voters going to the polls today, it is unlikely the markets will pay attention to any data or developments other than those related to the vote. The Australian NAB business conditions and business confidence indices for October could further Australian Dollar gains or losses depending on the results.
Sterling
The Australian Dollar racked up gains of over 1% yesterday on the back of renewed market confidence. The Pound took a particular battering due to the strong rise seen on Friday as investors scrambled to buy GBP in order to purchase safe UK gilts. With little domestic news to provide support and the confidence from last week’s High Court ruling fading, the Pound had little to offer investors yesterday.
Industrial and manufacturing production statistics for September could cause some volatility for the Pound.
Euro
The Euro slumped yesterday as investors raced to buy either US Dollars or riskier currencies like the Australian Dollar. The day’s data was mixed, with the overall picture largely skewed to the downside. German factory orders disappointed on the year and unexpectedly declined on the month, while the French and Eurozone PMIs weakened further into contraction territory. More positively, the Sentix investor confidence index rose from 8.5 to 13.1, much better than the climb to 9 forecast.
Should the markets be able to tear themselves away from the latest US election news, the German industrial production and trade balance figures for September could unsettle the Euro.
US Dollar
With the FBI having cleared Hillary Clinton of criminal wrongdoing for the second time, the US Dollar surged ahead on the Democrat’s improved election prospects. The race to the White House remained closely fought, but the bullishness of the ‘Greenback’ suggested that the markets were confident of a Clinton victory. The FBI once again came under fire for its timing, with Donald Trump claiming that a ‘rigged system’ was protecting his Democratic rival.
Canadian Dollar
As well as enjoying a boost from strong risk appetite, the Canadian Dollar was also buoyed by a rise in crude oil prices. Oil has taken a hit over the past few days, dropping from a more-than-yearly high of over US$52 per barrel down to a seven-week low of around US$44.60. However, a 5.0 magnitude earthquake near the largest crude oil storage hub in the US – Cushing, Oklahoma – boosted oil futures, although it was later confirmed that no damage had been done to the hub. This helped push the ‘Loonie’ higher.
With no domestic data on the calendar the Canadian Dollar will be left to react to the day’s US election news.
New Zealand Dollar
The New Zealand Dollar was on mixed form yesterday, registering bullish gains against the Pound, Euro and Chinese Yuan, but falling against the US Dollar and its commodity peers. Risk appetite may have been firmly on, but the approach of this week’s monetary policy meeting made the ‘Kiwi’ a less attractive prospect than its other high-risk brethren. The Reserve Bank of New Zealand (RBNZ) is expected to cut interest rates to a fresh low of 1.75%, so from the market’s point of view the New Zealand Dollar outlook is bearish.
The US election will drive New Zealand Dollar movement today.
Data Released
November 8th USD US Election
November 8th 11.30 AUD NAB Business Conditions (OCT)
November 8th 11.30 AUD NAB Business Confidence (OCT)
November 8th 18.00 EUR German Industrial Production n.s.a. and w.d.a. (YoY) (SEP)
November 8th 18.00 EUR German Trade Balance (euros) (SEP)
November 8th 20.30 GBP Industrial Production (YoY) (SEP)
November 8th 20.30 GBP Manufacturing Production (YoY) (SEP)