Australian Dollar
The Australian Dollar continued declining on the back of Thursday’s poor employment data come the end of the week. With the Reserve Bank of Australia (RBA) already having signalled that the strength of the labour market was of concern, the odds of policymakers returning to an easing bias increased. Strong bets on US monetary tightening next month also continued weakening demand for risk-correlated assets.
It’s a poor data week virtually across the board, with the low-impact ANZ Roy Morgan weekly consumer confidence index tomorrow being one of the most important releases for Australian Dollar movement.
Sterling
The Australian Dollar’s only gains versus its major peers on Friday came against Pound Sterling. Brexit was back in focus, with a warning from the German Finance Minister regarding the extent of potential UK contributions to the EU budget after Brexit supporting AUD/GBP exchange rates. According to Wolfgang Schäuble, Britain may be held accountable for all the spending promises made during its time as a member of the European Union. With finance for many projects agreed years in advance, this could see the UK still paying billions per year into the EU budget for a decade following the Brexit.
While tier-one data is due from the UK at the end of the week, in the form of preliminary Q3 GDP figures, tomorrow’s public sector borrowing figures are likely to play a significant role in moving the AUD/GBP exchange rate. Chancellor Philip Hammond will deliver his first budget statement on Wednesday, so another expansion in the deficit on Tuesday would significantly lower expectations for spending measures.
Euro
European Central Bank (ECB) President Mario Draghi stated that the Eurozone’s economic recovery was still dependent upon loose monetary policy. Investors, who only a few weeks ago had been hopeful of receiving news of an agreed taper to quantitative easing, sold the Euro on the prospect of continued stimulus measures. Recurrent firm bets of tighter US monetary policy weighed on the common currency.
Mario Draghi is scheduled to speak again on Tuesday. Given that the central bank head has already set out his view that loose monetary stimulus is still required, there may not be a particularly strong Euro reaction should he repeat this sentiment again.
US Dollar
The US Dollar appeared to have plateaued on Friday, with the ‘Greenback’ largely soft despite recent comments from Janet Yellen that she would remain Chair of the Federal Reserve until her term expired and that an interest rate hike was likely in the near-term. Investors have already largely priced in the anticipated hike next month, leaving little room for upward movement for the ‘Buck’. Signs of softness in the US Dollar could be an indication that the market is starting to fear the ‘Greenback’ is overvalued; many large companies including Coca Cola and Apple have already warned that the strength of the North American unit is squeezing their profits.
Thursday will see the release of minutes from the Federal Open Market Committee’s (FOMC) meeting at the beginning of November. Considering how far the US Dollar has appreciated, the ‘Greenback’ may not see a strong reaction should the minutes prove hawkish, while a more dovish than expected account could send USD tumbling.
Canadian Dollar
Movements in the oil market distracted investors from the day’s underwhelming Canadian data on Friday, keeping the Canadian Dollar largely bullish. Consumer price growth accelerated from 1.3% to 1.5% on the year as expected, although core price growth unexpectedly remained at 0.2% on the month and dipped to 1.7% on the year. Despite this, positive news from the oil markets kept the ‘Loonie’ on the advance. Suggestions Iran and Iraq might cooperate in the OPEC cut, rather than being allowed to continue upping production, along with suggestions Russia was also on board, supported crude and kept demand for the Canadian Dollar strong.
The only notable Canadian data this week will be September’s retail sales figures published tomorrow.
New Zealand Dollar
Some positive data finally encouraged investors to buy back into the New Zealand Dollar on Friday, after the ‘Kiwi’ slumped on falling demand following the natural disasters which struck New Zealand this week. The ANZ consumer confidence index leapt up 3.5% to 127.2 in November, while both input and output producer prices grew significantly. Both of these things signal that inflationary pressures are likely to build in the coming months, potentially deterring the Reserve Bank of New Zealand (RBNZ) from cutting interest rates any further.
New Zealand trade balance data for October will be released on Friday after a virtually empty data week.
Data Released
November 21st 08.30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index (NOV 20)
November 22nd 02.00 EUR ECB’s Draghi Speaks at European Parliament in Strasbourg
November 22nd 19.30 GBP Public Sector Net Borrowing (Pounds) (OCT)
November 22nd 23.30 CAD Retail Sales (MoM) (SEP)
November 24th 05.00 USD US Fed Releases Minutes from November 1-2 FOMC Meeting
November 25th 07.45 NZD Trade Balance (New Zealand dollars) (OCT)