Australian Dollar
The day’s Australian data was largely disappointing yesterday, weakening the Australian Dollar against the majority of its peers. The consumer confidence index fell to 113.4 from 118.6, while the NAB business conditions survey index edged down to 5 points from 7. House price growth also slowed to 1.5% and 3.5% on the quarter and the year respectively. Chinese production and retail data was positive, but this wasn’t good enough to overpower the headwinds generated by domestic ecostats.
The Australian Westpac consumer confidence index for December is set for release today.
Sterling
Strong inflation data boosted the Pound and weakened the AUD/GBP exchange rate yesterday. Despite spending the past few weeks worrying about overheating consumer price growth, thanks to weakened Sterling, investors responded positively to the news of above-forecast inflation. The Bank of England (BoE) may have warned previously that it would not use rising inflation to justify rate hikes, but investors are now of the opinion that consumer price growth is so strong the Monetary Policy Committee (MPC) will be forced to tighten policy.
Investors will want to see strong growth from today’s UK average weekly earnings figures as this indicates consumers will be more easily able to absorb the financial impact from rising goods prices.
Euro
Eurozone data was fairly mixed yesterday; the main ZEW sentiment survey for the currency bloc as a whole rose from 15.8 to 18.1, but the German measure unexpectedly remained stuck at 13.8. The biggest news of the day was the resurgence of the Greek debt crisis. The International Monetary Fund (IMF) posted a blog claiming its intentions over the Greek bailout were being misconstrued; an indirect dig at Eurogroup creditors. Greece later struck back, however, with the country’s Finance Minister accusing the Fund of ‘economising’ the truth.
Today’s Eurozone industrial production figures are expected to show a small uptick on the month, but a slowdown on the year.
US Dollar
The US Dollar was wobbling yesterday, with investors torn between their certainty of a Federal Reserve rate hike and their concerns over the conduct of President-Elect Donald Trump. For the second time in as many weeks, a bellicose tweet from the incoming President wiped billions from the share value of a US giant; this time F-35 fighter jet manufacturer Lockheed Martin. Some of the confidence that Trump would be more restrained as President than he was on the campaign trial is beginning to evaporate, unsettling the long-term US outlook.
There is no US data set for release today, but all eyes will be on the Federal Reserve monetary policy meeting, the results of which will be announced early on Thursday morning.
Canadian Dollar
Having weakened on profit-taking on Monday, the Canadian Dollar remained soft yesterday due to cool appetite for the ‘Loonie’. Crude oil was trading sideways and the markets were largely awaiting the US interest rate decision, which will be announced early on Thursday morning. Consequently, no one wanted to buy the risk-correlated ‘Loonie’ until after the latest US developments.
New Zealand Dollar
New Zealand’s data wasn’t particularly promising yesterday, with Q3 manufacturing volume growth slowing to 2.1% and manufacturing volume dropping from 1.8% to 0.4%. However, with the Australian and Canadian Dollars in a weak position and the Euro and US Dollar also soft, markets were in the mood to hunt for yield, making the New Zealand Dollar the commodity-correlated asset of choice. Chinese data supported a positive outlook for New Zealand exporters, with industrial production and retail sales growth both accelerating.
Data Released
December 14th 10.30 AUD Westpac Consumer Confidence (DEC)
December 14th 20.30 GBP Weekly Earnings ex Bonus (3M/YoY) (OCT) 2.6%
December 14th 21.00 EUR Eurozone Industrial Production w.d.a. (YoY) (OCT) 0.8%
December 15th 06.00 USD Federal Open Market Committee Rate Decision (DEC 14) 0.75%