Australian Dollar
Strong financing data from China lifted the Australian Dollar yesterday as it suggested that Chinese businesses were seeing improved access to the credit they needed to grow. Expansion in the Asian superpower is good news for its Australian trading partner. Aggregate financing clocked in over CNY 600 billion above forecast at CNY 1740 billion, while the volume of new Yuan loans made in November outpaced forecasts by CNY 75 billion to hit CNY 794 billion. This all helped distract from the news that consumer confidence had continued falling, with the decline accelerating to -3.9%.
The Australian Dollar may be able to shake the influence of this morning’s Fed news and hold firm on domestic data, as employment figures are expected to show an additional 17,500 people entered work in November.
Sterling
AUD/GBP exchange rates were stuck around opening levels yesterday. The Pound was unsettled by mixed labour market data, with investors uncertain about which part of the data set should be given priority. On the one hand, above-forecast wage growth of 2.8% suggested that workers would be more able to cope with rising inflation following the vote for Brexit. However, UK employment surprised forecasts to the downside, dropping -6,000 instead of rising 50,000 in the three months to October. While the unemployment rate remained the same, this was the first time in a year that employment had fallen.
The Bank of England will announce the results of its final monetary policy meeting of 2016 today. Investors will want to see if there are any comments about rate hikes given the recent strong inflation.
Euro
Relations between Greece and its creditors grew even more frosty yesterday after the International Monetary Fund opened a can of worms on Monday by claiming it was being misrepresented. Investors were beginning to expect that Greek Prime Minister Alexis Tsipras would ask the IMF not to be involved in the bailout talks any more. Additionally, Eurogroup creditors were irked by Tsipras’ surprise decision to give struggling Greek pensioners a Christmas bonus payout. Tsipras claimed Greece had exceeded its 2016 budget surplus target, but Eurogroup creditors were so vexed by the spending measure that they temporarily suspended debt relief that would have wiped -20% off Greek government debt by 2060.
A slew of Eurozone PMIs is set for release today, including the Eurozone composite PMI, which is expected to crawl higher.
US Dollar
The US Dollar weakened yesterday as the latest policy announcement by the Federal Reserve approached. Weak domestic data clouded the long-term economic outlook, causing traders to wobble on their hopes that the Fed would also announce a more hawkish outlook for monetary policy in 2017. Advance retail sales only grew 0.1%, disappointing forecasts by -0.2% thanks to a commensurate downward revision to October’s growth rate.
While the day’s most important US event has already happened, tonight’s consumer price index figures could be important, especially as they will build upon the outlook for 2017 monetary policy.
Canadian Dollar
The Canadian Dollar was largely weakened yesterday after the latest oil market developments put a dampener on the recent positivity generated by OPEC’s agreed production cut. US crude inventories were predicted to have risen significantly against forecasts, climbing 4.7 million barrels compared to predictions of a -1.6 million decline. When the data was finally released, it showed the forecasts were wrong, with inventories declining further-than-expected, but by this point the oil markets had already weakened significantly on the earlier estimates. Additionally, OPEC revealed that its estimate for oil surplus in 2017 would be 300,000 barrels per day higher than initially projected, even taking into account the agreed cutbacks.
The only Canadian data set for release today is the low-impact manufacturing shipments figures for October.
New Zealand Dollar
The New Zealand Dollar continued to enjoy its status as the most popular of the commodity trio yesterday, making gains across the board. The ‘Kiwi’ also benefitted from the latest Chinese data.
New Zealand manufacturing data is set for release today, but the Federal Reserve’s decision could remain the key driver of the ‘Kiwi’ in the short-term.
Data Released
December 15th 07.30 NZD Business NZ Performance of Manufacturing Index (NOV)
December 15th 10.30 AUD Employment Change (NOV) 17.5k
December 15th 19.00 EUR Markit Eurozone Composite PMI (DEC P) 54.0
December 15th 22.00 GBP Bank of England Rate Decision (DEC 15) 0.25%
December 15th 23.30 CAD Manufacturing Shipments (MoM) (OCT) 0.5%
December 15th 23.30 USD Consumer Price Index (YoY) (NOV) 1.7%