Australian Dollar
Currency trading was thin across the board yesterday as the US electorate went to the polls. Investors were unwilling to adjust their positions ahead of today’s (potential) results, with the memory of June’s shock Brexit referendum result keeping market overconfidence at bay. The latest Chinese data didn’t exactly give investors a reason to buy into the ‘Aussie’ either, with imports falling -1.4% in October; a slowdown on September’s decline, but still worse than anticipated. Consumer confidence may have climbed from 114.1 to 117.8, but the NAB business survey results weakened.
Should the result of the US election prove, against all the odds, to have little effect on the markets, the Australian Dollar could see movement in response to the Westpac consumer confidence index and the Chinese consumer price index. China is expected to have seen accelerating inflation in October, which could support the Australian Dollar higher – market conditions permitting.
Sterling
Investors were selling out of the Pound yesterday at a commensurate rate to the Australian Dollar, keeping the AUD/GBP exchange rate around opening levels. A warning from tax experts that Philip Hammond could be facing a -£25 billion black hole in public finances did not inspire confidence. If true, the Chancellor will have little room to manoeuvre when he delivers his autumn budget statement at the end of the month, potentially weakening any attempts at fiscal stimulus.
UK trade balance figures are set for release today. Forecasts are for the deficits to narrow, although considering the shortfalls expanded by more than expected last time round, investors may not be particularly cheered even if the new figures are in line with current projections.
Euro
Mixed German data gave nervous investors even more justification for staying largely bearish on the Euro yesterday. Industrial production in the Eurozone’s powerhouse economy fell -1.8% in September against predictions of a -0.5% decline, while the rate of annualised output halved to 1.2% instead of printing at 2%. The current account was marginally weaker-than-expected, thanks to a downwards revision of the previous figure to 17.4 billion.
The latest European Commission Economic Forecasts will be released tonight. Both inflation and GDP in the Eurozone remain sluggish, so any signs of building growth pressures will be welcomed.
US Dollar
The US Dollar unsurprisingly traded softly yesterday as markets waited to see if Hillary Clinton or Donald Trump had managed to clinch the vital battleground states. Huge queues and record turnouts showed that this was a truly momentous election, with voters desperate to make their voices heard.
There is little US data on the calendar today, although with the next President of the United States likely to be named, this is not a fact that anyone is going to notice.
Canadian Dollar
The Canadian Dollar was, remarkably, making small advances yesterday. Despite the jitters surrounding the US election, not to mention the fact that crude oil had weakened around -0.9%, the ‘Loonie’ was largely recording minor advances. Domestic data was also poor, with the number of building permits issued in September -7% lower than in August, against forecasts of a -5.8% drop.
With no Canadian data on the calendar today, the ‘Loonie’ will be left reacting to the latest US news. The trajectory of the US Dollar is likely to have a strong impact upon the oil markets, dragging the petro-correlated Canadian Dollar along with them.
New Zealand Dollar
Like the Canadian Dollar, the New Zealand Dollar was advancing despite the bearish state of the market. Carry trades made the ‘Kiwi’ appealing, as investors looked to profit from the significant difference between interest rates in New Zealand and many of the other major developed nations. For example, New Zealand’s interest rate is currently 1.5% higher than in the US, making New Zealand Dollar investments more profitable than US Dollar-denominated ones.
New Zealand card spending figures for October will be released soon.
Data Released
November 9th 08.45 NZD Card Spending Retail (MoM) (OCT) 0.4%
November 9th 10.30 AUD Westpac Consumer Confidence (NOV)
November 9th 12.30 CNY Consumer Price Index (YoY) (OCT) 2.1%
November 9th 16.00 USD US Election Result Announced (Estimated Time)
November 9th 20.30 GBP Visible Trade Balance (Pounds) (SEP) -£11300
November 9th 21.00 EUR European Commission Economic Forecasts