Australian Dollar
Consumer confidence may have fallen and Donald Trump may have sounded the death knell for the Trans-Pacific Partnership, but the Australian Dollar posted strong gains yesterday. The Reserve Bank of Australia’s (RBA) Assistant Governor, Christopher Kent, gave the ‘Aussie’ a boost after commenting that the outlook for states hit hardest by the mining bust was improving. According to Kent, stronger growth in these areas was coming and ‘would contribute to a rise in domestic inflationary pressures and a gradual return of inflation to more normal levels.’
Australian skilled vacancies and construction work done figures will be released today.
Sterling
The Australian Dollar to Pound Sterling exchange rate advanced yesterday after UK public borrowing figures disappointed investors. The data actually came in better-than-forecast, with public sector borrowing nearly -2 billion lower than projected, at -4.3 billion, while September’s borrowing was revised lower to -9.2 billion. But this still left the Treasury likely to significantly overshoot targets for this fiscal year, giving Philip Hammond little room at the upcoming Autumn Statement to announce any fresh fiscal stimulus.
Philip Hammond will deliver the Autumn Budget Statement tonight.
Euro
The Euro was mixed yesterday, sliding against the Australian, Canadian and US Dollars, while posting soft gains elsewhere. Traders were still disappointed by European Central Bank (ECB) Chief Mario Draghi’s comments that the Eurozone recovery depended upon loose monetary policy. Eurozone Consumer confidence figures for November helped cheer investors, however, after sentiment climbed to -6.1 instead of edging from -8 to -7.8 as forecast.
There is a slew of Eurozone PMIs due this evening; markets will be particularly interested in how the Eurozone composite performs.
US Dollar
Bets that the US Federal Reserve would hike interest rates in December hit a staggering 100% for the first time ever yesterday, as markets wagered US$2.1 trillion on the central bank tightening monetary policy. The US Dollar understandably notched up strong gains. In June this year, bets of a hike in the final policy meeting of 2016 were just 12%, while two months ago they had risen to 58%. Four days before the December 2015 rate hike, odds were still under 80%. Markets expectations are now roughly in line with monetary policy projections from the Fed itself, which point to two interest rate hikes in 2017.
US mortgage applications figures for last week will be released tonight.
Canadian Dollar
The Canadian Dollar was making strong advances versus several of its peers, with the exception of the bullish Australian Dollar and US Dollar. The oil markets were on a bit of a rollercoaster as markets continued to speculate on the progress of the OPEC deal to cut production. WTI racked up gains in the region of 4% after a member of the Nigerian delegate commented that they expected everyone to be on board with the proposal by the end of the day.
New Zealand Dollar
With traders absolutely certain of a US rate hike next month and attractive movements from the Australian and Canadian Dollars, there was little demand for the New Zealand Dollar yesterday. The ‘Kiwi’ weakened, pressured lower by news that net migration continued to rise to new record highs. This has caused some consternation in New Zealand, as politicians have begun to worry that the country’s infrastructure and public funds cannot cope with the influx of immigrants.
Data Released
November 23rd 11.30 AUD Construction Work Done (3Q) -1.7%
November 23rd 20.00 EUR Markit Eurozone Composite PMI (NOV P) 53.3
November 23rd 23.00 USD MBA Mortgage Applications (NOV 18)
November 23rd 23.30 GBP UK Autumn Budget Statement