Wage Growth Disappointment Weighs on Australian Dollar
The mood towards the Australian Dollar continued to sour in the wake of the third quarter wage price index. A surprise easing from 2.3% to 2.2% fuelled market anxiety over the health of the Australian economic outlook, suggesting that a further shift towards dovishness could be on the cards for the Reserve Bank of Australia (RBA). As the Trump administration indicated a willingness to impose further tariffs on Chinese exports a general deterioration in market sentiment added to the weakness of AUD exchange rates.
An uptick in October’s unemployment rate may see the Australian Dollar fall further out of favour this morning.
Pound Stumbles on UK Inflation Miss
October’s UK consumer price index data fell short of forecast as the headline inflation rate eased from 1.7% to 1.5% on the year. While markets had expected to see inflationary pressure ease this dip still left the Pound on a weaker footing against its rivals yesterday. With the Bank of England (BoE) already showing signs of dovishness the decline in inflation gave investors further incentive to bet on the prospect of an upcoming interest rate hike.
However, as forecasts point towards another solid month of retail sales growth the Pound could find a fresh rallying point.
Positive Eurozone Industrial Production Shores up Euro
A surprise uptick in September’s monthly Eurozone industrial production offered a limited boost to the Euro overnight. While production maintained growth on the month this was not enough to prevent the year-on-year figure from posting another sharp decline. Confirmation that the German consumer price index dipped from 1.2% to 1.1% in October gave EUR exchange rates little in the way of support, meanwhile.
If the third quarter sees another quarterly contraction from the German economy the Euro looks set to extend its recent losses further.
Rising Consumer Price Index Fails to Boost US Dollar
While October’s US consumer price index saw an unexpected acceleration on the year this failed to encourage any particular USD exchange rate bullishness last night. As the CPI is not the Federal Reserve’s preferred measure of inflation this limited the ultimate impact of the data. Investors instead focused on the latest commentary from Fed Chair Jerome Powell, looking for any fresh signs of caution.
If market risk appetite remains muted this could help the US Dollar to return to a stronger footing in the near term.
Canadian Dollar Struggles to Find Support
Limited movement in the oil market saw the Canadian Dollar struggling to gain any particular momentum during Wednesday’s European session. With investors still seeing a risk of the Bank of Canada (BOC) turning increasingly dovish in the months ahead CAD exchange rates found little support overnight.
Unless the housing market can demonstrate signs of recovery the Canadian Dollar may fall further out of favour tonight.
Lack of RBNZ Rate Cut Drives New Zealand Dollar Surge
The Reserve Bank of New Zealand (RBNZ) caught markets off guard with its decision to leave interest rates on hold yesterday. As markets had effectively priced in a 25bpt interest rate cut this saw NZD exchange rates rally sharply over the course of the day. While confidence in the underlying health of the New Zealand economy remains generally muted this did not prevent the New Zealand Dollar recovering lost ground.
As investors continue to unwind their earlier bets on a rate cut NZD exchange rates are likely to remain biased to the upside.
Data Releases
November 14th 10:30 AUD Unemployment Rate (OCT) 5.3%
November 14th 17:00 EUR German Gross Domestic Product (YoY) (3Q) -0.1%
November 14th 19:30 GBP Retail Sales ex Auto Fuel (YoY) (OCT) 3.4%
November 14th 20:00 EUR Eurozone Industrial Production (YoY) (SEP) -2.3%
November 14th 23:30 CAD New Housing Price Index (YoY) (SEP) -0.2%