Australian Dollar
Strong demand for commodity-correlated currencies saw the Australian Dollar trend bullishly against most of its peers yesterday. Further supporting gains for the ‘Aussie’ was the latest Organisation for Economic Co-operation and Development (OECD), which suggested that inflation in Australia was set to normalise next year. According to the OECD, the Reserve Bank of Australia (RBA) will need to start raising interest rates towards the end of 2017 to prevent consumer prices from overheating.
The latest weekly Australian consumer confidence survey results will be released this morning.
Sterling
Compared to those for Australia, the latest OECD projections for the UK were not positive. AUD/GBP exchange rates charged higher after the organisation forecast that UK growth would be 1.2% in 2017 and just 1% in 2018. This would be the weakest rate of economic expansion since the recession of 2009 following the global financial crisis. Furthermore, a group of cross-party MPs published a report commissioned from the Centre for Economic and Business Research (CEBR) concluding that nearly every sector of the UK economy would be negatively impacted by a ‘Hard Brexit’.
UK mortgage approvals figures today will give another indication of how confident homebuyers are feeling since the Brexit. Considering 2,100 more approvals are forecast than September’s 62,900, it is likely the Pound will receive some mild support from the data.
Euro
The Euro was mixed yesterday ahead of an appearance at the European Parliament by European Central Bank (ECB) President Mario Draghi. The US Dollar’s initial weakness helped the Euro register some strong gains initially although concerns Draghi might have some negative surprises up his sleeve later weakened the common currency. The ECB President did comment that the Governing Council would review its quantitative easing programme next month. Investors will be keeping a keen eye for hints of extension or tapering.
There is plenty of Eurozone economic data set for release today, including the preliminary French GDP figures for the third quarter. German GDP figures follow at midnight tomorrow.
US Dollar
The US Dollar was also boosted by the latest Organisation for Economic Co-operation and Development forecasts, which helped reverse a sell-off sparked earlier in the day by oil market volatility creating the perfect opportunity for profit-taking. The OECD revised its growth forecasts for the US up by 0.2% to 2.3% for 2017, while predicting a rise in inflation from the current 1.2% to 2.2% in 2018. This pushed Fed rate hike bets for next month up to 95.9%.
US consumer confidence figures are expected to show a strong rise in sentiment when they are released very early tomorrow morning.
Canadian Dollar
The Organisation for the Petroleum Exporting Countries (OPEC) met yesterday to begin their discussions regarding a possible deal to cut oil production. The oil markets and the Canadian Dollar started the day soft, but strengthened later in the session as positive signs emerged. The oil minister of Iraq, one of the OPEC members most resistant to production cuts, commented that his country would co-operate in order to reach a deal that was ‘acceptable to all’. Oil prices responded by surging 2.3%, helping the Canadian Dollar notch up strong gains.
Bank of Canada (BOC) Governor Stephen Poloz will be giving a speech and a press conference today.
New Zealand Dollar
The New Zealand Dollar was benefitting from both the bearishness and the bullishness of investors yesterday. Traders hoping an OPEC deal would drive commodity currencies higher sold out of the US Dollar and bought currencies including the ‘Kiwi’. Meanwhile, more dovish investors, anticipating a commodity route should OPEC refuse to cut oil output, bought New Zealand Dollars in order to invest them in government bonds, which promise a higher yield than those of many other developed nations due to NZ’s comparatively high interest rates.
Data Released
November 29th 09.30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index (NOV 27)
November 29th 11.45 CAD BOC’s Poloz at CD Howe, followed by press conference
November 29th 18.45 EUR French Gross Domestic Product (YoY) (3Q P) 1.1%
November 29th 20.30 GBP Mortgage Approvals (OCT) 65.0k
November 30th 00.00 EUR German Consumer Price Index (YoY) (NOV P) 0.8%
November 30th 02.00 USD Consumer Confidence (NOV) 101.3