Australian Dollar
Falling consumer confidence and concerns over Australia’s trade outlook weakened the Australian Dollar against a number of its peers yesterday. The recent signing of an executive order by the US President to withdraw from the Trans-Pacific Partnership (TPP) threatens the collapse of the entire deal. Australian lawmakers are hoping China will step in to fill the gap and keep the agreement alive; an ironic development considering TPP was meant to curb China’s rising economic influence in the region. While consumers reported rising finances, the outlook for economic conditions over the coming twelve months weakened notably, with the overall sentiment index weakening -1.9% to 117.0.
Fourth-quarter consumer prices data is released today. An acceleration from 1.3% to 1.6% year-on-year is expected, but quarter-on-quarter growth is expected to hold at 0.7%, which could take the edge off the annual figure as it suggests that the uptick is more due to historical weakness in prices than contemporary strength.
Sterling
The Australian Dollar to Pound Sterling exchange rate was yesterday able to advance despite the UK Supreme Court ruling that the government could not trigger Article 50 without permission from Parliament. Despite being what many investors had hoped for, the ruling weakened the Pound. Analysts were taken by surprise, but a combination of profit-taking and fears over the likelihood of a second Scottish independence referendum were thought to be the cause. Concerns over the latter were sparked because the Supreme Court also ruled that devolved governments did not have a constitutional right to be consulted over the Brexit process.
The only data released for the UK today will be the low-impact CBI orders, selling prices and business optimism reports.
Euro
The Euro was on mixed form yesterday after the day’s slew of PMI results either bettered forecasts or failed to meet estimates. Fears that weakness in Germany, a country once considered the Eurozone’s powerhouse economy, was still weighing on Eurozone growth resurfaced after the January services and composite PMIs dragged the same measures for the currency bloc lower. Manufacturing across the Eurozone accelerated above forecast, but this was not enough to do more than keep AUD/EUR from advancing above opening levels.
Ifo business climate, expectations and current assessment surveys for Germany will be released this evening.
US Dollar
Fears over Donald Trump’s protectionist agenda continued to weigh on the US Dollar yesterday. Markets had been focussed on his plans for fiscal stimulus in the run-up to his inauguration, despite warnings over the potential damage the new President’s anti-trade stance could cause the US economy, but the reality continued to dawn yesterday. With Trump focussing on withdrawing from TPP and targeting a renegotiation of the North American Free Trade Agreement (NAFTA), it seems stimulus measures aren’t top of the Presidential agenda.
US mortgage applications data is the only US ecostat on the economic calendar today.
Canadian Dollar
US Dollar weakness was boosting oil prices yesterday, allowing the Canadian Dollar to make bullish advances. WTI Crude rose 0.8% to US$53.17, while Brent Crude climbed 0.7% to US$55.59 per barrel. Meanwhile, concerns raised by Trump’s talk of renegotiating NAFTA eased slightly after Canada’s US ambassador suggested Canada would look to agree some bilateral terms. He implied that Canada may exclude Mexico in order to keep the US on side; investors, believing this to be an agreeable proposition from Trump’s point of view, bought the Canadian Dollar on the smaller likelihood of a huge economic disruption.
New Zealand Dollar
The New Zealand Dollar was largely enjoying strong gains yesterday, with the exception of against the bullish Canadian Dollar. USD weakness pushed up commodity prices and domestic data provided further tailwinds. November’s performance of services index was revised higher to 58.1, while December’s score improved to 58.4.
New Zealand credit card spending data for December is set for release this afternoon.
Data Released
January 25th 11.30 AUD Consumer Prices Index (YoY) (4Q) 1.6%
January 25th 13.00 NZD Credit Card Spending (YoY) (DEC)
January 25th 20.00 EUR German IFO – Expectations (JAN) 105.8
January 25th 22.00 GBP CBI Trends Selling Prices (JAN) 30
January 25th 23.00 USD MBA Mortgage Applications (JAN 20) 0.4%