Australian Dollar
A combination of US Dollar weakness and continued iron ore price strength kept the Australia Dollar on a strong footing yesterday. Spot prices of iron – the on-the-day price for commodity trades – only inched higher, but Chinese iron ore futures rose over 3%. This suggests that the outlook for iron ore continues to be to the upside, even if traders are losing their appetite for the mineral at present. Meanwhile, domestic data showed credit card balances and purchases both supportively ticked higher by around AU$1 billion each in November.
Sterling
AUD/GBP registered strong gains, with the Pound on mixed form elsewhere. A lack of UK data hindered Sterling, although comments from Bank of England (BoE) Governor Mark Carney proved supportive. The Governor suggested early yesterday morning that the strong post-referendum performance from the UK economy could see the BoE positively revise its forecasts for the coming year.
Euro
Some positive data supported the Euro against many of its peers yesterday, but the common currency edged lower versus the Australian Dollar. Germany’s final 2016 GDP growth rate clocked in at 1.9% – an acceleration double the ten basis points expected. Industrial production in the Eurozone was particularly strong, rising 1.5% on the month and 3.2% on the year. These greatly bettered predictions, which expected growth of 0.5% and 1.5% respectively.
Eurozone data today will be focussed on inflation, with the Finnish and Spanish inflation rates and German wholesale price index for December potentially combining to alter the outlook on price growth in the currency bloc.
US Dollar
Donald Trump’s pre-inauguration press conference was not judged by investors to have been a success. As a result, the US Dollar dropped across the board yesterday. The President-Elect did not get around to discussing his plans for fiscal stimulus, as he spent much of the event defending himself from questions about the numerous controversies that have dogged him since before the election. Since his victory speech after the election calmed market fears that he could not be ‘presidential’ in his demeanour, the side of Trump seen during campaigning has gradually re-emerged. The press event further heightened fears that Trump many not suit the role, after the Republican spent his time with journalists defending himself against allegations Russia had compromising information on his sexual exploits.
Key US data will be released just after midnight, with the advance retail sales and University of Michigan consumer confidence index potentially able to repair some of the damage from Trump’s press conference.
Canadian Dollar
The US Dollar was weak, commodity demand high and oil prices showing strong rises. Yet the Canadian Dollar softened yesterday. However, while US investors were reacting badly to the lack of news on Trump’s policies yesterday, Canadian traders felt they had enough information about his administration to justify a bearish outlook on the Canadian Dollar. Almost half of economists polled by Reuters have cut their growth forecasts in light of Trump’s protectionist policies, while the Bank of Canada (BOC) isn’t expected to raise interest rates until the third quarter of 2018.
Canadian existing home sales data for December may inspire some CAD movement before the weekend.
New Zealand Dollar
Like the Australian Dollar, the New Zealand Dollar was enjoying the heightened risk-appetite sparked by a weakening US Dollar yesterday. Domestic data was underwhelming, with the truckometer heavy for December showing a -0.1% decline in haulage activity during December. November’s figure was revised lower to 3.8%. The ANZ commodity price index slowed from 3.2% to 0.7%. However, the ‘Kiwi’ was unaffected, notching up strong advances.
New Zealand card spending data for December is expected to show a 1% increase when it is released this morning.
Data Released
January 13th 08.45 NZD Card Spending Retail (MoM) (DEC) 1.0%
January 13th 18.00 EUR German Wholesale Price Index (YoY) (DEC) 1.0%
January 14th 00.30 USD Advance Retail Sales (DEC) 0.7%
January 14th 01.00 CAD Existing Home Sales (MoM) (DEC)