Australian Dollar Falters as RBA Highlights Wage Growth Worries
The Reserve Bank of Australia’s (RBA) latest statement of monetary policy offered a mixed message to investors, leaving the Australian Dollar on a weaker footing. As the statement highlighted policymaker concern over a lacklustre rate of wage growth the potential for future interest rate cuts remained elevated. Fading hopes of an imminent breakthrough in US-China trade relations also put a dampener on AUD exchange rates ahead of the weekend.
With tomorrow’s NAB business confidence index expected to show another month of lacklustre sentiment the Australian Dollar may remain under pressure today.
Fading Impact of BoE Split Encourages Pound Support
GBP exchange rates were able to recover some of their latest losses during trade on Friday, benefitting from a lack of fresh domestic data. With markets having already largely priced in the heightened likelihood of an upcoming Bank of England (BoE) interest rate cut the downside potential of the Pound diminished. Even so, as a sense of economic and political uncertainty still hangs over the UK outlook this recovery could prove short-lived.
However, if the third quarter UK gross domestic product bounces back as forecast this may offer the Pound a solid rallying point.
German Export Rebound Benefits Euro
A better-than-expected rebound in German exports offered the Euro a leg up ahead of the weekend. The 1.5% monthly increase in exports helped to swell the trade surplus from 16.4 billion to 21.1 billion in September, suggesting that trade tensions had a more limited impact on the German economy. Even so, as French trade data proved less encouraging in nature the single currency struggled to extend its gains further.
Lingering global trade anxiety may see the single currency fall out of favour once again, particularly if the US remains committed to tariffs on various EU products.
US Dollar Rallies in Spite of Consumer Confidence Miss
While November’s University of Michigan consumer confidence index failed to pick up as far as forecast this still gave the US Dollar a boost. As the headline index strengthened from 95.5 to 95.7 this encouraged bets that consumers are largely shrugging off the impact of ongoing trade tensions with China. Although September’s wholesale inventories figure proved less positive in nature this was not enough to drag USD exchange rates lower.
If markets see lower odds of an imminent breakthrough in US-China trade relations this could offer the safe-haven currency further support.
Underwhelming Labour Market Data Fuels Canadian Dollar Decline
A steady unemployment rate was not enough to shore up CAD exchange rates during Friday’s European session. While unemployment held steady at 5.5% in October this was accompanied by a surprise decline in the headline employment change figure. With the labour market showing signs of loosening, even as wage growth picked up, the mood towards the Canadian Dollar naturally soured.
An extended decline in oil prices may fuel further CAD exchange rate selling pressure in the near term.
Trade Doubts Weigh Heavily on New Zealand Dollar
Growing doubts over the potential for the US and China to imminently sign off on a preliminary trade deal dragged on the risk-sensitive New Zealand Dollar. With the global trade and growth outlooks still looking distinctly muted NZD exchange rates remained on the back foot, as confidence in the domestic outlook also weakened.
Any weakness in October’s retail card spending figures may prompt the New Zealand Dollar to shed further ground this morning.
Data Releases
November 11th 07:45 NZD Retail Card Spending (MoM) (OCT)
November 11th 19:30 GBP Gross Domestic Product (QoQ) 0.3%