Australian Dollar
The Australian Dollar was largely on the advance yesterday, boosted as commodity prices enjoyed a rise on the back of a weaker US Dollar. As well as a 1.2% rise in commodity indices, the Australian Dollar was also boosted by the latest forecasts from leading market analysts. Ignoring the news that Chinese iron ore stockpiles had swelled and Rio Tinto was planning to cut jobs, the Australian Dollar instead advanced on predictions from Deloitte Access Economics that a Donald Trump Presidency in the US was unlikely to disrupt the Australian economy. Further support for the ‘Aussie’ came from Goldman Sachs, which upgraded its outlook on the domestic economy.
ANZ Roy Morgan weekly consumer confidence data for the previous week is set for release this morning, followed this evening by a speech from the Reserve Bank of Australia’s (RBA) Christopher Kent.
Sterling
The Australian Dollar slumped against the Pound yesterday, with Sterling trending bullishly across the board after a speech by Prime Minister Theresa May. Speaking at the Confederation of British Industry (CBI) conference, May commented that the government was likely to seek a transitional deal allowing the UK to gradually withdraw from the European Union while avoiding a sudden shock to business. If Article 50 was triggered on schedule and the transition period began at the end of the allotted two-year negotiation period, this could mean the UK does not achieve full ‘Brexit’ until 2024.
Traders will be very interested to see today’s government borrowing figures for October. With Philip Hammond announcing his latest budget measures tomorrow, today’s figures will show how much fiscal room the new Chancellor has in which to manoeuvre. Smaller deficits will raise hopes of strong spending measures, while consistent or increased spending shortfalls will likely depress Sterling on fears that Hammond will be left with few options.
Euro
The Euro was largely on the rise yesterday, boosted by the latest development in the French Presidential elections. One-time President Nicholas Sarkozy was sent out of the race in a shock move that saw former Prime Minister Francois Fillon take over 44% of the vote. Fillon holds many voter-friendly policies, including his hard-line stance on Brexit and his social conservatism. With strong support from groups including Catholics and those seeking political change, Fillon is perceived by markets as having a strong chance of winning should he end up head-to-head with far-right Marine Le Pen in May. This would avoid, for now, another ‘Brexit or Trump moment shaking the Eurozone political system, improving investor sentiment towards the Euro.
US Dollar
The US Dollar slumped yesterday as markets began to wonder if the post-Trump rally was overdone. As was seen last December, just before the Fed hiked interest rates, the US Dollar has been driven up by strong market pricing of a tighter monetary policy, potentially threatening the profitability of US businesses by making US-produced goods more expensive for overseas customers. Thanks to the rally triggered by Trump’s election and the fact Fed hike bets were standing at an enormous 95% yesterday, traders began to see downside risks to the US Dollar and quickly sold out of the ‘Greenback’.
Canadian Dollar
Crude oil prices were charging across the board, but the Canadian Dollar’s performance yesterday was more mixed. WTI climbed 2.5%, while Brent was up 2.7%, thanks to the weakness of the US Dollar driving prices higher. Market hopes of an OPEC agreement to cut production at the next meeting continued to rise, supporting the Canadian Dollar higher.
New Zealand Dollar
The New Zealand Dollar was also benefitting from US Dollar weakness, following commodity indices higher. Positive domestic data further supported the ‘Kiwi’. According to data for October, credit card spending increased 2.8% on the month and 10.2% on the year, while the previous monthly and yearly figures were revised to 3.2% and 8.5% respectively.
New Zealand net migration figures for October are set for release today.
Data Released
November 22nd 08.45 NZD Net Migration SA (OCT)
November 22nd 09.30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index (NOV 20)
November 22nd 20.30 GBP Public Sector Net Borrowing (Pounds) (OCT)