Australian Dollar
A disappointing set of domestic labour market figures weakened the Australian Dollar yesterday. The unemployment rate managed to hold at 5.6% rather than increasing to 5.7% as expected, although this was only because the participation rate fell instead of rising. The employment change figure saw 9,800 jobs created in October – over -6,000 fewer than forecast – while September’s decline was revised sharply higher to -29,000. A revision to September’s full time employment change figure showed that -74,300 dropped out of full time work. As a result, the Australian Dollar weakened versus its major peers.
Sterling
The AUD/GBP exchange rate did not slump as far as it could have considering the strong rise in retail sales data supporting the Pound. On the month sales growth rose from 0.4% to 2% in October, while annualised growth charged from 4% to 7.6%. However, news that Philip Hammond would warn of a £100 billion hole in public finances over the coming few years unsettled investors. Also weakening Pound confidence was the news that the government was holding a bill to limit the powers of the House of Lords in reserve should peers fail to toe the line, particularly with regards to the triggering of Article 50.
Euro
Another indication that the European Central Bank (ECB) would extend its quantitative easing scheme past the scheduled end date of March 2017 softened the Euro yesterday. ECB official Yves Mersch claimed that recovery in the Eurozone was still fragile and this called for caution, stating that loose monetary policy remained appropriate. The ECB next meets to decide monetary policy at the beginning of December; a few weeks ago markets were getting excited by the prospect of a taper to QE, but that seems increasingly unlikely now.
European Central Bank (ECB) Chief Mario Draghi is scheduled to speak in Frankfurt today as part of Euro Finance Week.
US Dollar
The US Dollar experienced limited movement yesterday as investors held off adjusting their positions as Federal Reserve Chair Janet Yellen testified to Congress. As well as discussing monetary policy, markets were expecting her to field questions upon her tenure as Fed Chief; Democrat Yellen has found herself the target of much criticism from Republican President-elect Donald Trump. Jobless claims and inflation data came in broadly in line with forecasts, but with markets already almost completely pricing in a December rate hike, the US Dollar saw little upwards momentum after the data was released.
The only development on the US economic calendar is that the Fed’s James Bullard will be appearing as part of a panel at Euro Finance Week today.
Canadian Dollar
Crude oil markets were focussing on the positives yesterday, despite the presence of tailwinds for what it now seems mordant to call ‘black gold’. Saudi Arabian Energy Minister Khalid al-Falih claimed in an interview that he was confident OPEC would reach an agreement to cut production during its next meeting, scheduled for November 30th. This sparked huge gains for crude oil and boosted the Canadian Dollar, despite the recent data showing a surge in US stockpiles and news that Saudi Arabia’s oil production increased in September.
Canadian consumer price index data is due for release early on Saturday morning. Non-core price growth is expected to have accelerated from 1.3% to 1.5% on the year in October, which could boost the Canadian Dollar.
New Zealand Dollar
The New Zealand Dollar remained bearish yesterday. Storms and heavy rain were battering central New Zealand, creating even more havoc in areas still struggling with the aftermath of the recent 7.8 magnitude earthquake. Ministry of Civil Defence Emergency Management Director Sarah Stuart-Black told reporters that, ‘We are really concerned about the changing weather situation. It could mean that there’s an increased risk of further landslides, obviously surface flooding, so we want people to be safe.’
The only New Zealand data scheduled for release today is the ANZ consumer confidence figure for November.
Data Released
November 18th 11.00 ANZ ANZ Consumer Confidence Index (NOV)
November 18th 19.00 EUR ECB’s Draghi Speaks at Euro Finance Week in Frankfurt
November 18th 21.30 USD Fed’s Bullard Speaks on Panel in Frankfurt
November 19th 00.30 CAD Consumer Price Index (YoY) (OCT) 1.5%