Australian Dollar
The Australian Dollar had gotten over the excitement of Thursday’s positive labour market data by Friday. The prospect of several US interest rate hikes in 2017 undermined appetite for the ‘Aussie’, causing the commodity-correlated asset to slump. Additionally, Prime Minister Malcolm Turnbull has urged the Senate to approve his plan to cut corporation tax rates in 2017. According to the PM, Donald Trump’s incoming US Presidency is set to make Australia ‘even less competitive’ and the recent GDP figures were ‘a real wake-up call’.
The Reserve Bank of Australia (RBA) is set to publish its latest meeting minutes on Tuesday.
Sterling
AUD/GBP exchange rates slumped on Friday. As well as exploiting the ‘Aussie’ sell-off, Pound Sterling was also boosted by strong Confederation of British Industry (CBI) data. Total orders grew at their fastest pace in 20 months, with most of the sectors of British manufacturing seeing improved output. This, according to experts, indicated that the recent poor manufacturing data for October was simply a blip and that the economy could continue to strengthen going into 2017.
UK public sector borrowing data for November is set for release on Tuesday.
Euro
Eurozone inflation data released on Friday proved that ‘no news is good news’ when it comes to the Euro. Consumer price figures were released in their finalised forms, showing no change on earlier estimates; a fact that relieved traders. The Eurozone trade surplus did fall further-than-expected, but markets were happy to buy the weak Euro after Thursday’s slump in the face of a strengthening US Dollar.
The European Central Bank (ECB) publishes its latest Economic Bulletin on Thursday.
US Dollar
Friday saw the US Dollar weakening as traders took profit on the recent strength of the ‘Greenback’. The sell-off slowed during the early hours this morning, even though the data released then was disappointing. The number of housing starts in November clocked in nearly -150k below forecast at 1090k, representing a month-on-month decline of -18.7% against predictions of a -7% slowdown. Building permits declined -4.7%, clocking in at 1201k compared to 1240k.
US GDP figures are released on Friday and are expected to show a 0.1% revision to the previous third-quarter estimates of 3.2%.
Canadian Dollar
The Canadian Dollar was on mixed form on Friday, making strong gains versus its commodity cousins, but falling against the less risky assets. The falling USD was pushing crude oil prices higher, while Canada’s international securities transactions figure for October, released early this morning, rose from an upwardly-revised CA$11.79 billion to CA$15.75 billion. The Bank of Canada’s (BOC) Financial System Review offered mixed messages, warning that levels of risky debt were spreading across Canada, but that the pressure on the market would wane over time.
Canadian consumer price data for November is set for release on Friday.
New Zealand Dollar
The US Dollar may not have been performing well, but the New Zealand Dollar continued to slump. The outlook for New Zealand monetary policy had already taken a hit, thanks to the potential for USD to weaken NZD, therefore removing one headache for the Reserve Bank of New Zealand (RBNZ). But the day’s consumer confidence index also dampened the inflation outlook, therefore the odds of near-term interest rate hikes, after the index for December fell -2.1% to 124.5.
Although trading is likely to thin as the markets wind down for the Christmas period, the New Zealand Dollar is likely to see volatility after Tuesday Global Dairy Trade auction.
Data Released
December 20th NZD Dairy Auction Avg. Winning Price MT (DEC 20)
December 20th 11.30 AUD RBA December Meeting Minutes
December 21st 20.30 GBP Public Sector Net Borrowing (Pounds) (NOV)
December 22nd 20.00 EUR ECB Publishes Economic Bulletin
December 23rd 00.30 USD Gross Domestic Product (Annualized) (3Q T) 3.3%
December 23rd 00.30 CAD Consumer Price Index (YoY) (NOV)