Australian Dollar
Market conditions were not supportive of an Australian Dollar advance yesterday – yet the ‘Aussie’ racked up bullish gains. The timing of a correctional rebound as investors bought up the Australian Dollar from its post-US election lows coincided with a global withdrawal from safer currencies as markets scrambled after US government bonds. Chinese industrial production and retail sales data failed to weigh on the ‘Aussie’, despite industry output failing to accelerate and transactions growth unexpectedly slowing.
Minutes from the Reserve Bank of Australia’s recent monetary policy meeting will be released later today.
Sterling
The Australian Dollar to Pound Sterling exchange rate was able to climb thanks to Pound weakness across the board. Investors were still of the belief that Donald Trump’s intended infrastructure spend would boost inflation in the US, which was pushing US bond yields even higher. This saw investors selling off UK government debt, converting their Pounds into US Dollars and buying US debt. The initial excitement generated by comments from Donald Trump about the UK getting preferential treatment when negotiating trade deals was beginning to wear off. Markets were starting to wonder whether it was actually possible for the UK to secure a good trade deal, given Trump’s fiercely protectionist stance.
The UK’s October consumer price index is set for release today.
Euro
Fears that Trump’s election victory could inspire a similar shock to the political system in the Eurozone continued to drag the Euro lower yesterday. Focus has turned to the upcoming Italian referendum, which will see voters deciding whether to limit the powers of the senate in order to speed up and simplify the process of passing new laws. Italian Prime Minister Matteo Renzi had claimed he would resign if the referendum lost, which is a concern to markets as a defeat is looking like a possibility. Renzi’s resignation would likely trigger a general election; with Eurosceptic party Five Star Movement enjoying marked popularity that could be a serious threat to the Eurozone and EU.
There is plenty of data likely to move the Euro today, including preliminary third-quarter GDP figures for Italy, Germany and the Eurozone.
US Dollar
The demand for US bonds kept the US Dollar on the rise yesterday, helped by firming bets of tighter US monetary policy. If Trump’s intended spending plan does boost inflation in line with market expectations, the Federal Reserve will be forced to respond by hiking interest rates faster or in larger increments than originally anticipated. Bets of monetary tightening in December have recovered from the shock of Trump’s election, with the odds of a 0.25% increase now around their highest at over 81%.
Upcoming US advance retail sales data may not have much of an impact upon the US Dollar; growth is only expected to slow by ten basis points and Trump continues to hold the market focus.
Canadian Dollar
The Canadian Dollar was largely able to make strong gains versus its peers yesterday, although the Australian Dollar to Canadian Dollar exchange rate remained around opening levels and the ‘Loonie’ slid against the US Dollar. This was despite another slump in crude oil, taking WTI and Brent even further from the yearly highs reached just a couple of months ago.
There is no Canadian data on the calendar today.
New Zealand Dollar
The ‘Kiwi’ advanced yesterday, even though the day’s data was not supportive. As well as Chinese figures disappointing, the domestic REINZ house sales figure showed a -14.2% decline in property sales throughout October; an acceleration on the already-notable -9.5% year-on-year slump seen the previous month. Investors were also buying up the New Zealand Dollar from its recent lows, although the Australian Dollar and Canadian Dollar were more popular options.
The New Zealand Dollar may trend independently of the global market sentiment today if the latest Global Dairy Trade auction yields a rise in milk prices.
Data Released
November 15th NZD Dairy Auction Avg. Winning Price MT (NOV 15)
November 15th 11.30 AUD RBA Nov. Meeting Minutes
November 15th 20.30 GBP Consumer Price Index (YoY) (OCT) 1.1%
November 15th 21.00 EUR Eurozone Gross Domestic Product s.a. (YoY) (3Q P) 1.6%
November 16th 00.30 USD Advance Retail Sales (OCT) 0.5%