Australian Dollar
Data showing that wage growth in Australia hit a record low during the third quarter of the year provided fresh impetus to the already declining Australian Dollar. The wage price index only rose 0.4% between July and September, with annualised growth clocking in below the already-low forecast of 2% at 1.9%. The rate of pay growth is now under half what it was during the mining boom of a decade ago. The news disappointed investors as it was widely believed that inflation had bottomed out. Markets were reassessing their view that the Reserve Bank of Australia (RBA) was done with its easing bias, lowering appetite for the Australian Dollar in the process.
Although tomorrow’s unemployment rate is forecast to rise, this is because the participation rate is expected to go up. Considering the employment change figure is predicted to have increased by 15,000, the rise in the jobless rate is unlikely to harm the ‘Aussie’.
Sterling
The Australian Dollar to Pound Sterling exchange rate slumped yesterday despite mixed UK data unsettling investors. Labour market figures for September and October gave two conflicting pictures. September’s ILO unemployment rate was positive, falling to an 11-year low of 4.8%, while weekly earnings excluding bonus growth edged up to 2.4%. However, markets initially reacted negatively to the claimant count rate; October’s clocked in nearly five times above forecast at 9,800, while September’s figure was revised up from 700 to 5,600. However, the notable weakness in the ‘Aussie’ kept AUD/GBP firmly on the decline.
UK retail sales are expected to have experienced a strong acceleration in October, although it should be noted that this comes after a significant slowdown the previous month.
Euro
The Euro was rudderless yesterday, remaining largely soft as it responded to strength or weakness in its major peers. Markets were concerned that the European Commission warned eight Eurozone member countries that their budgets for the coming year risked breaching the EU’s deficit rules. Belgium, Cyprus, Finland, Italy, Lithuania, Portugal, Slovenia and Spain have all submitted budgets that potentially breach EU rules regarding deficits and national debt. Considering the rules are in place to avoid a repeat of the sovereign debt crisis, the fact that so many Eurozone members are struggling to stay within the boundaries concerned investors.
The Euro could find some support tomorrow if the finalised Eurozone consumer price index for October is revised up to 0.5% from 0.4% as forecast.
US Dollar
Bets that the US Federal Reserve would hike interest rates in December’s policy meeting reached a remarkable 90.6% recently, keeping demand for the US Dollar high. An index of the US Dollar’s overall performance against a basket of currencies rose to a 14-year high after further Fed officials backed monetary tightening in December. James Bullard did comment that one hike might be sufficient for the time being, but markets were focussed on the short-term, keeping the ‘Greenback’ in high demand.
The only development on the US economic calendar today is a speech by the Fed’s Patrick Harker.
Canadian Dollar
The Canadian Dollar was able to rack up bullish gains yesterday, despite the fact that the latest US crude stockpiles data showed over twice as many barrels of oil – 5.2 million – had been added than expected. Oil was supported higher by the fact that the International Energy Agency (IEA) claimed that demand for oil would continue to grow, with no end currently in sight. This helped push WTI and Brent further away from the month’s lows, supporting the Canadian Dollar.
There is no Canadian data set for release today.
New Zealand Dollar
With New Zealand still reeling from the impact of the latest earthquakes, investors remained bearish on the New Zealand Dollar. The ‘Kiwi’ weakened against all its major peers, with the exception of the tumbling Australian Dollar.
Should markets begin to turn their attention back towards ecostats today, the third-quarter producer price data may spark some movement for the ‘Kiwi’ as it may indicate the direction of future consumer price growth.
Data Released
November 17th 08.45 NZD Producer Prices – Inputs (QoQ) (3Q)
November 17th 09.30 USD Fed’s Harker Speaks in Philadelphia on Purpose of Federal Reserve
November 17th 11.30 AUD Employment Change (OCT) 15.0k
November 17th 20.30 GBP Retail Sales (YoY) (OCT) 5.4%
November 17th 21.00 EUR Eurozone Consumer Price Index (YoY) (OCT F) 0.5%