Australian Dollar
Unsurprisingly, the third quarter Australian producer price index showed modest slowing on the year to ease from 1.7% to 1.6%. This reflected the weakness of the recent consumer price index data, adding to the less impressive picture of domestic inflationary pressure. The mood towards the ‘Aussie’ soured further thanks to political developments, with the government losing its one-seat majority as Deputy Prime Minister Barnaby Joyce was ruled wrongly elected thanks to his then-dual citizenship.
Even so, as Joyce has pledged to seek re-election the political fallout of the verdict may not keep the Australian Dollar under pressure for long.
Sterling
Confidence in the Pound remained generally lacking on Friday, even as market focus started to shift towards the upcoming Bank of England (BoE) policy meeting. While the prospect of an imminent interest rate hike is still considered a near-certainty support for GBP exchange rates has lagged. This is largely due to doubts over the likelihood of a rate hike signalling the start of a monetary tightening cycle, given that some policymakers have recently expressed concern over the move.
Any weakening in the latest raft of UK consumer lending data could put further pressure on Sterling this evening.
Euro
A better-than-expected uptick in the German import price index failed to particularly shore up the Euro, even though this points towards stronger inflationary pressure. Given the dovish nature of European Central Bank (ECB) President Mario Draghi’s recent comments, though, this solid improvement is not likely to be enough to alter the policy outlook. Investors were also encouraged to take a more bearish view of the single currency after the Catalan administration voted to declare independence from Spain during Friday’s European trading session.
However, if October’s German consumer price index also betters forecast this could offer EUR exchange rates some degree of support.
US Dollar
The bullish run of the ‘Greenback’ continued apace ahead of the weekend, with the third quarter annualised gross domestic product surprising to the upside. Rather than showing a loss of momentum GDP clocked in at a robust 3.0%, the world’s largest economy effectively shrugging off the impact of the recent hurricane season. This positive showing was seen to further cement the prospect of the Federal Reserve raising interest rates once again in December, boosting the appeal of the US Dollar.
If September’s personal consumption expenditure data points towards an uptick in inflationary pressure this could encourage USD exchange rates to extend their gains further.
Canadian Dollar
While oil prices remained well-supported by continued signs of the global oversupply glut easing this was not enough to bolster demand for the Canadian Dollar. A lack of fresh domestic data and persistent disappointment over the dovish outlook of the Bank of Canada (BOC) kept up the downside pressure on CAD exchange rates. The relative strength of the US Dollar equally served to limit the appeal of the ‘Loonie’.
Unless the general sense of market risk appetite improves today the Canadian Dollar may struggle to find any significant traction against its rivals.
New Zealand Dollar
Technical support helped the ‘Kiwi’ to recover some measure of strength ahead of the weekend, even though the antipodean currency remains largely under pressure. Even so, NZD exchange rates remained down on the week. Political jitters continue to dominate the mood towards the New Zealand Dollar, however, with markets still less-than-thrilled by the new centre-left government.
With no fresh New Zealand data releases due today the ‘Kiwi’ is unlikely to see any significant gains.
Data Released
October 30th 19:30 GBP Net Consumer Credit (SEP) 1.5 billion
October 30th 19:30 GBP Mortgage Approvals (SEP) 66,000
October 30th 22:30 USD Personal Consumption Expenditure Core (YoY) (SEP)
October 30th 23:00 EUR German Consumer Price Index (YoY) (OCT) 1.7%