Australian Dollar (AUD) Buoyed by Rising Risk Appetite
The Australian Dollar (AUD) benefited from returning risk-appetite before the weekend after China lifted its tariffs on US soybeans and pork products, a move that has been interpreted as a step towards the two superpowers inking a ‘phase one’ trade deal in the near-term.
Investors will now be looking to the upcoming speech by Reserve Bank of Australia (RBA) Governor Philip Lowe. If Lowe indicates that the RBA is still content to leave interest rates on hold the Australian Dollar could strengthen.
Pound Sterling (GBP) Fluctuates, UK Election Looms
The Pound (GBP) began to ease against many of its competitors on Friday after it was announced that Prime Minister Boris Johnson would go ahead in a second head-to-head debate with Labour leader Jeremy Corbyn.
Concerns that Johnson’s performance could have a negative impact on the Tories’ position in opinion polls saw Sterling drift lower against the US, Australian and New Zealand Dollars.
Over the course of this week data will take a back seat as investors focus on the upcoming election.
Any indications that the vote could end in a hung parliament would be GBP negative.
Euro (EUR) Dips as German Industrial Production Slumps
The Euro (EUR) was left subdued after German data revealed a serious slump in industrial production, increasing concerns for the outlook of the Eurozone’s largest economy.
Andrew Kenningham, Chief Europe Economist at Capital Economics, was downbeat about Germany’s economic recovery, saying:
‘The sharp decline in production in October suggests that, far from bottoming out, Germany’s industrial recession may be getting worse.’
The Euro could come under further pressure later today if the Eurozone’s investor confidence index declines.
US Dollar (USD) Surges after US Jobs Data
The US Dollar (USD) edged higher before the weekend after November’s US Nonfarm Payrolls beat forecasts, rising from 156,000 to 266,000 – the biggest increase in 10 months.
November’s US average hourly earnings figure also impressed, coming in at a better-than-expected 3.1% and boosted confidence in the ‘Greenback’.
Gains against some currencies were limited however as risk appetite improved.
This week’s biggest US data includes the nation’s consumer price index, due out on Wednesday.
Canadian Dollar (CAD) Down after Employment Stats
The Canadian Dollar (CAD) fell after Canada’s Net Change in Employment figure for November plummeting from -1.8 thousand to -71.2 thousand, while Canada’s unemployment rose to 5.9% in the same month.
Friday’s jobs figures increased the odds of the Bank of Canada (BoC) rethinking monetary policy and left CAD on the backfoot, so investors will be looking to this week’s speech by Governor Poloz for guidance.
New Zealand Dollar (NZD) Supported by US-China News
The risk-sensitive ‘Kiwi’ also benefited from progressing US-China trade relations at the end of last week.
This week’s NZ data is all fairly low-impact so risk appetite may remain the main cause of New Zealand Dollar movement.
Data Releases
8:15 NZD Manufacturing Activity
17:30 EUR German Trade Balance
20:00 EUR Sentix Investor Confidence
23:45 CAD Housing Starts